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: Danielle 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 The firm's U.S. location purchased computer chips from Japan and agreed to pay in yen at delivery after 90 days. The estimations of the purchase cost are based on the 90-day forward rate. Danielle identifies the risk, classifies it, and recommends potential strategies. Based on your understanding of foreign exchange risk, complete the tasks involved in Danielle's analysis. Identify the risk Transaction exposure O Economic exposure Identify the risk Transaction exposure Economic exposure Translation exposure Type of risk Long-term risk Short-term risk Strategies for managing the risk Invest in interest-bearing Japanese securities. Invest in interest-bearing U.S. securities. Sell the amount of the purchase cost at the known 90-day forward rate