General Motors (GM) is buying some parts from a European factory. Specifically GM has ordered 2000 engines to put in Chevrolet Silverado pickup trucks it plans to produce at its US assembly plants. Each pickup truck engine is priced at 2500 EUR and GM will pay the European factory for the 2000 eninges in 2 months. The current spot rate is 1 USD/EUR and the two month forward rate $1.1 USD/EUR.

Is this foreign exchange rate exposure best described as transaction, translation or operating exposure for GM? Why? How can GM hedge this exposure to foreign exchange risk? Explain why the strategy works. NO MISSING GRAPHS OR DATA. NOT INCOMPLETE QUESTION.