Mark to market is the term used to qualify the valuation method according to which the value of an instrument or financial contract is systematically adjusted based on current market prices. It also means "evaluating according to the market". Financial assets (but also real ones) can be valued at historical cost (or acquisition cost), according to a "current cost" procedure, which would be the historical cost reported to date by means of a price index, or according to market price. With a view to establishing the "truth of the financial statements", accounting standards usually require the use of the mark to market to assess financial assets and liabilities. This principle becomes uncomfortable when, as happened in 2007-2008 with the Subprime Crisis, the market for many types of securities becomes illiquid and fear leads to such low prices to create massive losses, eroding profits and capital. Evaluation procedures, however, leave some margin for adopting different prices.

The "marking to market" technique is predominantly used in futures and options markets. Links externalize the wikitesto

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