What are the drawbacks of MTM?
While MTM accounting is important and widely used, it also has some potential drawbacks. For example, MTM can lead to volatility by forcing companies to report unrealized losses, even if they do not actually intend to sell them. You can calculate MTM in stock market by multiplying the number of units by their current market price or fair value per unit. The formula is: MTM Value = Number of Units × Current Market Price or Fair Value per Unit.Mark-to-market (MTM) is the practice of valuing financial instruments, assets, or liabilities based on their current market value rather than their historical cost.The Mark-to-Market (MTM) process refers to the daily adjustment of unrealised profit or loss on open futures, based on the closing price declared by the exchange.