Course Description
This course presents the basic elements of short to long-term international trade finance and payments. It discusses various ways to assess the risk for international trade transactions and strategies to minimize such risk. The course focuses on cash management techniques used in conjunction with international trade transactions and requires students to prepare a trade project. The course also examines cash flows and financial statements prepared according to different accounting standards.
Course Content
1. Trade risks and risk assessment
- International trade practices
- Product risks
- Commercial risks (purchaser risks)
- Adverse business risks
- Political risks
- Currency risks
- Financial risks
2. Methods of payment
3. Bonds, guarantees and standby letters of credit
4. Currency risk management
- Currency risk
- The currency markets
- The spot trade
- Currency exposure
- Hedging currency risks
- Practical currency management
5. Export credit insurance
6. Trade finance
- Finance alternatives
- Pre-shipment finance
- Supplier credits
- Refinancing of supplier credits
- Buyer credits
- The international money market
7. Structured trade finance
- International leasing
- Lines of credit and local currency finance
- Project finance and joint venture
8. Terms of payment
9. Capital budgeting
- Cash flows estimation and management
- Other factors to consider: exchange rate fluctuations, inflation, financing arrangements, etc.
- Adjusting project assessment for risk (sensitivity analysis)
10. Collections and Disputes
- Collection procedures for international debts
- Commercial disputes and dispute resolution options
Means of Assessment
Assessment will be in accordance with the ÁñÁ«ÊÓƵ Evaluation Policy.
|
1. Mid-Term Exam(s)
|
0%-30%
|
|
2. Final Exam
|
20%-40%
|
|
3. Assignment(s)/Case Study(ies)/Quiz(zes) (Individual)
|
15%-35%
|
|
4. Project (Group)
|
10%-35%
|
|
5. Participation/Attendance
|
0%-10%
|
|
Total:
|
100%
|
- Fifty percent (50%) of non-exam assessments must be for individual work
- Students must achieve a grade of at least 50% on the combined exam components to pass the course.
- Students may conduct research as part of their coursework in this class. Instructors for the course are responsible for ensuring that student research projects comply with College policies on ethical conduct for research involving humans, which can require obtaining Informed Consent from participants and getting the approval of the ÁñÁ«ÊÓƵ Research Ethics Board prior to conducting the research.
Learning Outcomes
At the end of the course, the successful student should be able to:
- demonstrate understanding of the foundations of international trade and finance (transaction facilitation, risk management, financing, information sharing);
- evaluate the purchaser-related and the country-related risks (e.g. political and economic risks), and find possible ways to minimize or avoid them;
- evaluate the foreign-exchange risks;
- search for alternatives to finance international trades in the proper timeframe (short-, medium- and long-terms);
- prepare a trade project, identify its positive and negative cash flows, project the cash flow statements and evaluate the feasibility of the project from the financial perspective; and
- analyze financial statements, prepared using different accounting standards in accordance with the regulatory body for a specific country.
Textbook Materials
Textbooks will be chosen from the following list:
- International Trade Finance. Forum for International Trade Training (FITT, Latest edition, Free eBook download for students registered with FITT).
- Grath, Anders. The Handbook of International Trade and Finance. Kogan Page (Latest edition).
- Madura, Jeff. International Corporate Finance. Cengage Learning (Latest edition).
- Moffett, M. H.; Stonehill, A. I.; Fiteman, D. K. Fundamentals of Multinational Finance. Pearson (Latest edition).
And/or any alternative textbook that has been approved by the Business Management department.