When trading across borders, firms choose between different payment contracts. In particular, an exporter and an importer have to agree on should be made before or after delivery. (1) Explain the dterminants of international payment methods (ii) Discuss the role of Governments in international trade financing (iii) Explain the term 'Buyers credit' and identify the benefit of buyer's credit to the importer (iv) What are the steps involved in using buyers' credit as a payment option for international trade?

When trading across borders, firms choose between different payment contracts. In particular, an exporter and an importer have to agree on should be made before or after delivery. (1) Explain the dterminants of international payment methods (ii) Discuss the role of Governments in international trade financing (iii) Explain the term 'Buyers credit' and identify the benefit of buyer's credit to the importer (iv) What are the steps involved in using buyers' credit as a payment option for international trade?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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describe foreign currency transaction exposure, including accounting for and disclosuresabout foreign currency transaction gains and losses
One of the issues that companies need to address when dealing with foreign currencies is how fluctuations in that currency are handled. What is the dual transaction approach, accrual perspective? How might a company account for exchange rate fluctuations using this approach?
Why do governments intervene in the foreign exchange market? Check all that apply: To maintain exchange rate boundaries To reduce fear in financial markets To smooth out the business cycle To smooth out exchange rate movements To earn a profit for the government
What are the advantages or the disadvantages of hedging with currency options as opposed to future contracts in international financial transactions?
How has money laundering affected internatioal trade? Answer should discuss this effect between developed and emerging economies. Use current article to support answer.
Purchasing an option to buy foreign currency at a predetermined exchange rate in order to reduce exchange risk is called: A)transfer pricing. B)hedging. C)translating. D)cross-listing.
8 - What is the most risky payment method for the exporter company?A) Payment with acceptance creditB) Payment by letter of credit C) Pre-financingD) Cash against goods E) Advance payment
Reasons that a company might choose to acquire a business in a foreign country include all of the following except: Take advantage of free trade agreements Purchase local customer loyalty Local management understands local ing-hiet equatitions
If the value of contractual transactions is affected by exchange rate fluctuations, most likely the firm has the ______ exposure. A. economic B. country risk C. transaction D. translation
Functional currency is the currency that influences sales price, labour, material and other costs of a company’s goods and services. (a) Explain factors that should also be considered to determine the functional currency of a foreign operation. (b) Explain what will happen if a business transaction is denominated in foreign currency but reported in functional currency.
1. The state that an competitive markets free of transportation costs and barriers to identical trade (such as tariffs), products sold in different countries when must sell for the same price their price is expressed in terms of the same currency.
Accounting for Foreign Currency Transactions: Accounting for foreign currency transactions involves recording and reporting financial transactions denominated in a currency other than the entity's functional currency. Here are the key steps involved in handling such transactions: **1. Identifying Foreign Currency Transactions: Definition: Foreign currency transactions occur when a business entity conducts financial transactions, such as sales, purchases, or investments, in a currency different from its functional currency. Examples: Buying goods from a foreign supplier, selling products to overseas customers, or borrowing funds in a foreign currency. **2. Determining the Functional Currency: Primary Currency: Each business entity designates a functional currency, which is the primary currency used in its day-to-day operations and financial reporting. Factors Considered: Factors such as the location of the entity's primary economic activities, the currency in…

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