Suppose that you intend to hedge a CHF cash flow that is expected to materialize sometime within the next three months. 

You are contemplating whether you should:

Use a forward hedge by contacting a bank and setting up a forward contract on CHF that expires in 3 months, or

Use a futures hedge by trading CHF futures on the futures exchange in Chicago.

What are the factors that will lead you to prefer one versus the other alternative?

Answer rating: 100% (QA)

When deciding whether to use a forward hedge or a futures hedge for hedging a CHF cash flow several factors should be considered to determine the preferred alternative The factors include Margin requi... View the full answer