6. Foreign exchange risk Aa Aa Companies that compete in the global economy face various types of risks-for example, foreign exchange risk. Three distinct categories of foreign exchange risk are transaction risk, economic risk, and translation risk Consider the following case: Emma works for a multinational conglomerate firm. The firm's business extends across different sectors, such as computers, consumer electronics, and automobiles. Her job is to monitor foreign exchange risk and recommend strategies for managing it. Situation Emma's company has a subsidiary in Canada. In its recent periodic financial statement, the subsidiary reported investments in marketable securities of 1 milion Canadian dollars (CAD). The company will add this amount to the consolidated balance sheet at the current spot rate, but the annual report is expected to be submitted to the SEC in 60 days Emma identifies the risk, classifies it, and recommends potential strategies. Based on your understanding of foreign exchange risk, complete the tasks involved in Emma's analysis Identify the risk Type of risk Strategies for managing the risk Economic exposure Transaction exposure Translation exposure O Issue 1 million CAD equity shares O Issue 1 million CAD long-term bonds O Accounting risk Operating risk Issue 1 million CAD short-term bonds