URGENT WILL RATE IMMEDIATELY, please explain all concepts thoroughly and simplefied if possible

Where applicable, you may use the information you were given and/or results you have found in Exercises 1, 2, and 3.

A part of Flexfixs global strategy, is to get access to foreign investment capital. The CFO believes that a global investor base will create positive synergies for the companys futuregrowth.

1 In 200 words or less, explain what foreign exchange risk is, and what the exposure in this context would be for a foreign investor who owns Flexfix bonds.

2 In 200 words or less, explain how a foreign investor could hedge the relevant foreign exchange risk off-balance sheet.

3 In 200 words or less, explain how a foreign investor could hedge the relevant foreign exchange risk on-balance sheet.