Assume that a U.S.firm has an account receivable in Swiss francs,with payment due in 90 days,and wishes to hedge its exposure to currency rate fluctuations.

Explain the actions the U.S. firm would take to accomplish such a hedge. Describe how the U.S. firm’s financial statements would be affected if the Swiss franc strengthened relative to the U.S.dollar before the account receivable was collected. LPO8