Learning plc is a major toy retailer in the UK.It resources about 50% of its toys from its well established Chinese supplier Cheung International. It has just imported toys to the value of Chinese Yuan 104 million due in three months.Zaarour Bank has offered TT Leaming the following quotes Spot rate: Three-month forward rate Three-month Yuan deposit rate Three-month pound Sterling borrowing rate Three-month call option premium on Yuan at strike price of Yuan 14.6562/f TT Learning's weighted average cost of capital Yuan 14.8862/f Yuan 14.6640/f 6.60% per year 7.00% per year 1.75% 15% Required: a Calculate the cost of hedging using the money market and options contracts Critically examine the risk associated with each alternative b) TT Learning believes that the Chinese Yuan will continue to appreciate against the pound sterling in the forseeable future Critically evaluate the different hedging strategies which are available to TT Leaming to minimise its exposure to foreign exchange