Explain what concept of mark-to-market in futures contracts

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Problem

"HarvestCo" is an agricultural company which specialises in growing and selling wheat sourced fram eastern Australia, HarvestCo is naturally concerned about the volatility of the price of the wheat it sells and wants to hedge its risk. They decide to enter into an ASX Trade24 listed futures contract to lock in a price for their wheat delivery of about 20 metric tonnes in around 1 January 20%2. Get the instant assignment help. Explain what the concept of "mark-to-market" in futures contracts means, and what role the margin plays in relation to HarvestCo.

Reference no: EM133982928

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