Mark to market accounting mtm requires certain assets to be

Question

1. Mark to market accounting (MTM) requires certain assets to be listed on the balance sheet at “market” values and not book values.  Explain the following. 
   1. Explain the economic reasoning for requiring firms to MTM assets on their balance sheet.
   2. Explain what the differences are between Level 1, 2 and 3 pricing sources.
   3. Explain what the potential downsides are for firms using MTM.
2. Describe some of the ways you could feel more comfortable about using Level 2 or 3 pricing sources as part of your MTM activities.
3. Explain some of the ways the railroads have been changing the crude oil market in the United States over the last few years. 
4. The scheduling process is a very important part of the operations of a commodity trading organization.  Explain how scheduling adds value to the trading operations.  (You could also think about how bad scheduling can make good trades end up bad.) 
5. In the case study on “Dissecting a Fraud That Should Never Had Happened”, explain 2 problems that occurred and what specific controls were either not in place or not being followed that allowed the fraud to happen. 
6. Explain what the difference is between physical settlement and financial settlement.  Which of the two is the riskier type of settlement from the standpoint of the trading company?
7. In the article on “Integrating Voyage Partners” discusses problems with integrating IT systems across the industry.  Give 3 reasons and explain why you think previous attempts to integrate systems failed in this industry. 
8. The Frank-Dodd Wall Street Reform and Consumer Protection Act was passed in 2010.  Explain why several of the provisions of the act have not been implemented yet in 2015. 
9. Throughout the semester, we have continually referred back to the “Trading Transaction Lifecycle” chart.  (Nice color versions are in most of the powerpoint presentations for the class for you to refer back to.)  It gives you a general overview of the different operations of a commodity trading firm.  If you were thinking of joining a trading firm, in which area would you personally want to start?  Explain at least 3 reasons why you would want to be in that area.