A U$.$S$.-$based electronics firm contracts a supplier in Malaysia to produce components. During the six$-$month production cycle, the Malaysian ringgit strengthens significantly against the U$.$S$.$ dollar. Which type of currency exposure is the company primarily experiencing, and what is the likely impact?

Group of answer choices

Translation exposure; the company$$s reported overseas revenues will increase when converted to USD.

Translation exposure; inventory levels will need to be adjusted to reflect real$-$time exchange rates.

Transaction exposure; the supplier will need to renegotiate prices due to local inflation.

Neither transaction nor translation exposure; this is a strategic hedging issue, not an accounting issue.

Transaction exposure; the company$$s cost of purchasing from the supplier will rise in dollar terms.