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You are a US portfolio manager, holding €20m in stocks in 25 large European companies in 2000. You predict that the Euro is likely to fall over the next 6 months because of the ambiguous monetary policy statements of the new European Central Bank. You need a currency strategy that will be beneficial if your prediction is correct but will not lead to large losses if you are incorrect. Discuss the relative merits of using either an option or a futures contract to achieve your aims.

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