The treasurer of IOK is considering entering into a money market hedge in order to hedge a payable.
Which of the following might be valid explanations for the use of a money market hedge for this purpose?
A . There are no forward contracts available for the purchase of the payable currency using IOK’s home currency.
B . The timing of the payable does not permit the use of a forward contract.
C . The relevant currency markets are very thinly traded and the treasurer believes that forward contracts are mispriced.
D . A money market hedge is easier and less expensive to organise than a future or forward contract.
E . Money market hedges can be unwound whereas positions in derivatives cannot.
Answer: A,B,C