In 2020, Rula purchased $10,000 worth of Chinese securities at 6.40CNY per $US with an expected 4.5% returns on the investment after one year. Instead, she could have purchased $10,000 worth of US securities with an 6% returns after one year. i. Briefly explain why Rula was exposed to foreign exchange risk. Be specific

ii. Rula had a choice to hedge her foreign exchange risk in the futures market using the information in the table below.

Spot Price Futures Price June 2021 6.70CNY/$ Sell: 6.75CNY/1$ June 2022 Sell: 6.75 Buy: 6.85 How much US$ would she receive with a hedge