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Mark is long GBP 100 million and decides to use the futures market to hedge her...

Mark is long GBP 100 million and decides to use the futures market to hedge her portfolio rather than enter into a forward contract.  One contract is for GBP 50,000. The current month contract is trading at 1.21 USD/GBP.

  1. What is the USD notional value of one GBP futures contract?
  2. How many GBP contracts would be required to hedge the GBP 100 million portfolio?
  3. Would she buy or sell the GBP contracts in order to hedge the portfolio?
  4. What are the advantages and disadvantages of using the futures market rather than forward market to hedge the portfolio?
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