Hedging Foreign Exchange Fluctuations. Overseas Products Company billed a customer in a foreign country at 600,000 units of that country's currency. The exchange rate at that time was 50 units of local currency to one dollar. Overseas Products Company hoped to collect the equivalent of \(\$ 12,000\) from the customer in three months. Economic conditions changed in three months, and the currency was quoted at 120 units to the dollar when the company received payment.

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1. Compute the loss in foreign exchange to Overseas Products Company.

2. Explain what measures could have been taken to guard against the loss in foreign exchange.