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FINANCE OF INTERNATIONAL TRADE
Instructions to candidates:
a) Time allowed: Three
hours (plus an extra ten minutes’ reading time at the start – do not write
anything during this time)
b) Answer any FIVE
questions
c) All questions carry
equal marks. Marks for each question are shown in [ ]
1. A company has been importing and exporting
goods both in cash and on credit terms.
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a) Identify and
explain its exposure to foreign exchange rate risk.
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[6]
|
b) Explain how this
exposure can be eliminated by the two external hedging techniques – forward
|
|
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Contracts and money
market contracts.
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[14]
|
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2.
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Discuss the process of international trade,
highlighting its advantages and disadvantages.
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[20]
|
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3.
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Countertrade can take various forms. Explain
any FOUR of these forms.
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[20]
|
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4.
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a)
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Briefly discuss the
term globalisation.
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[6]
|
|
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b)
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State SEVEN advantages
of globalisation.
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[14]
|
5. Setting up foreign operations range from high
risk through to low risk operations. Explain any FOUR
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Such methods of
foreign operations.
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[20]
|
6. a) Factoring in international trade is on the
increase. Explain its function and discuss its main
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Advantages.
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[12]
|
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b) Discuss the method
of international trade finance referred to as forfaiting.
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[8]
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7. Write concise notes on the following in the
context of international trade:
a) Tariffs
b) Quotas
c) Exchange controls
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d) Invisible tariffs
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[5 each]
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8. The euro currency has produced real change to
the business environment throughout Europe.
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Discuss FIVE benefits
arising from its introduction.
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[20] |