Question Two (10 Marks) i. Briefly discuss the differences between Transaction risk, translation risk and economic risk and how they can be hedged. (6 Marks) ii. Explain how inflation and interest rates can be used to forecast exchange rates (4 Marks) Question Three (10 Marks) A hostile takeover is when a company or a shareholder tries to gain control of a target company by sidestepping the company's management and board of directors, and going directly to its shareholders i. What types of actions might the management of a firm take to fight a hostile acquisition bid from an unwanted suitor? (4 Marks) ii. How do the target firm shareholders benefit from the defensive tactics of their management team? (3 Marks) iii. How are the target firm shareholders harmed by such actions? Explain. (3 Marks)