How does marking to market affect risk management
How does marking to market affect risk management in derivatives trading?
Expert
If instruments are exchange traded or liquid, then marking to market is straightforward. You just require knowing the most recent market-traded price. Obviously, this doesn’t stop you also saying what you consider the value to be, or the profit you expect to build up. After all, you presumably entered the trade since you thought you would make a gain.
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Mr. James K. Silber, an avid international investor, sold a share of Rhone-Poulenc only, a French firm, for FF42. The share was bought for FF42 year ago. The exchange rate is FF6.15 per U.S. dollar and was FF6.65 per dollar a year ago. Mr. Silber acquired FF4
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