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Michelle Industries issued a Swiss franc - - denominated 5 - year discount note for SFr 2 0 0 million The proceeds were converted to
Michelle Industries issued a Swiss francdenominated year discount note for SFr million The proceeds were converted to US dollars to purchase capital equipment in the United States. The company want to hedge this currency expose and is considering the following alternatives:
Atthemoney Swiss franc call options.
Swiss franc forwards
Swiss franc futures.
What is an advantage of the suitability of this strategy in relation to Michelle's hedging objective?
The major difference from the firm's perspective between futures and forwards is in the booktomarket feature of futures.
The put option is distinguished by its symmetric payoff.
The call option gives the company the ability to benefit from depreciation in the franc, but at a cost equal to the option premium.
There is no advantage.
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