Charlies Chocolates PLC ('Charlies Chocolates') needs cocoa to make its chocolate products. The company expects to have to buy 10,000 tonnes of cocoa in December next year. However, the price of cocoa can be very volatile and the company is concemed about the risk of an increase in the price of cocoa between now and December. Consequently, Charlies Chocolates would like to find ways to buy the cocoa at a fixed price. The price for a futures contract for cocoa for delivery in December is 1,426 per tonne and the relevant contract calls for 10 tonnes. The current price of cocoa is 1,362 per tonne. Assume the open market price of cocoa in December will be 1,526 per tonne and ignore transaction costs and marking-to-market. Required: i. If the company takes no action to hedge against the price risk, calculate the price Charlies Chocolates will have to pay in December for 10,000 tonnes of cocoa. Explain your workings. 10 Marks ii. Assuming the company wishes to hedge against the price risk using futures contracts, calculate the net price Charlies Chocolates will pay in December for 10,000 tonnes of cocoa. Explain your workings. 10 Marks Explain the meaning of the term 'hedge' in this context