Multiple choice general knowledge

Gains and losses on futures positions are settled:

  1. by signing promissory notes

  2. each day after the close of trading.

  3. within five business days.

  4. directly between the buyer and seller

  5. none of the above.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Futures positions are marked-to-market daily, meaning gains and losses are calculated and settled at the end of each trading day. This daily settlement prevents losses from accumulating and reduces default risk. The process transfers funds from losing accounts to gaining accounts through the clearinghouse.

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