Discos is considering to protecting against the foreign trade risk through forward market hedge. An insurance policy is available at a cost of 125% of the spot Sterling equivalent of the export value. The policy gives the following protection: 95% cover against non-payment as a result of political actions by a foreign government; 90% cover against other nonpayment. Any payment by the insurer would be after six months. Discos have been advised that there is at least a 5% chance of late payment after six months or default by the client. The Xeridian government is not expected to take any action that is detrimental to foreign trade during the next six months. Required: Discuss the one advantage and a disadvantage of the alternative. State clearly any assumptions that you make. (5 marks) Compute the expected returns if Discos defaulted