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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
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: a. use a forward hedge by contacting a bank and setting up a forward contract on CHF that expires in 3 months, or b. 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?
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