2. Forward contracts are exible and arranged according to the needs of the customer as to the con-
tract size and maturity. On the other hand, futures have a particular contract size and maturity. If
the amount of currency exposure If the amount of currency exposure is not an exact multiple of the
contract size of the futures contract or if the end-of-exposure date does not conform to the futures
contract maturity date, hedging with futures will result in basis risk. In this case, forwards are better
in achieving a perfect hedge.
3. In futures, the party that has exposure needs to post the margin and post additional ...
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