Hedging cost?

CFA Level III
#1

If you’re using forwards to hedge currency risk (or anything really), what costs are there? I guess you can count opportunity cost and transaction/commissions, but since Forwars don’t cost anything up front, what costs is the book referring to when they say hedging is expensive?

Thanks for any help!

#2

basically 2 forms of H. cost;

  1. trading cost= bid-ask spread, transaction cost of rolling over contracts, option premiums and administrative cost of setting trading desks

  2. opprtunity cost of missing out on favorable currency movement.