A potentially significant difference between using a forward hedge and a money market hedge is that the:
A)forward hedge is less risky.
B)money market hedge produces less cash flow.
C)forward hedge produces less cash flow.
D)money market hedge involves greater transaction costs.

Question

Quizplus · Accepted Answer

The money market hedge often involves greater transaction costs compared to a forward hedge because it requires borrowing and lending in different currencies, which can involve multiple transactions and fees.

A Potentially Significant Difference Between Using a Forward Hedge and a Money