A Swiss portfolio manager has a significant portion of the portfolio invested in dollar-denominated assets. The money manager is worried about the political situation surrounding the next U.S. presidential election and fears a potential drop in the value of the dollar. The manager decides to
sell the dollars forward against Swiss francs.
a. Give some reasons why the Swiss money manager should use futures rather than forward currency contracts?
b. Give some reasons why the Swiss money manager should use forward currency contracts rather than futures?
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