KC Co. has its entire operations in Kansas City, and is an exporter of products to Japan. 40% of its earnings are derived from exports. The exports are denominated in Japanese Yen.

Tampa Co. (of Florida) is about the same size as Quartz and generates about the same amount of earnings in a typical year. It has a subsidiary in China that typically generates about 60% of those total earnings. All earnings at the Chinese subsidiary are reinvested in China and not remitted to the parent.

Explain which company faces higher transaction risk.

Explain which company faces higher translation risk.