Consignment in International Trade Consignment in international trade is described as a variation of open account. In this arrangement, payment is sent to the exporter only after the goods have been sold by the foreign distributor to the end customer. The transaction is based on a contractual arrangement. Under a Read more
A Letter of Credit (L/C) is identified in the sources as a method of payment used in international trade. It is described as a written obligation and a formal document issued by a bank on behalf of a customer. The fundamental purpose of an L/C is to ensure that the Read more
An Open Account is identified as a method of payment used in international trade. It is categorized as a form of trade credit. Trade credit, in general, arises when a firm purchases goods from another firm and is not required to pay for them immediately. During the period before payment Read more
International trade transactions between an exporter (seller) and an importer (buyer) are complicated by concerns that one party might not fulfil its obligation to the other. The exporter is typically concerned about receiving payment from the importer. There’s also a risk that the importer’s government could impose exchange controls preventing Read more
Foreign exchange risk management is a critical component of any business involved in international transactions. It encompasses the identification, assessment, and mitigation of risks that arise from fluctuations in foreign currency exchange rates. Due to the increased globalization of business and financial markets, coupled with the growth of international trade Read more
The Foreign Exchange Market (Forex, FX, or currency market) is a market in which currencies are bought and sold. It is distinct from a financial market where currencies are borrowed and lent. The primary purpose of the foreign exchange market is to permit transfers of purchasing power denominated in one Read more
Introduction to International Financial Management International Financial Management is defined as the management of finance in an international business environment. It is essential to study IFM because we are currently living in a highly globalized and integrated world economy. This trend towards globalization and integration is expected to continue due Read more
Lease Financing: A Contract for Use Lease financing is defined as a contractual arrangement where the owner of an asset, known as the lessor, grants another party, the lessee, the right to use that asset for a specified period. In return for this right to use the asset, the lessee Read more
Leasing is defined as a contractual arrangement where a party owning an asset, known as the lessor, provides the asset for use to another party, the lessee, for a certain period of time. The consideration for this right to use the asset is typically in the form of periodic payments Read more
A Swap is a type of derivative, which is a product whose value is derived from the value of one or more basic variables called bases. Swaps essentially allow parties to exchange their uncertain stream of cash flows for a more certain one. They are infinitely flexible instruments. Nature and Read more