Business studies test help needed

[stl_08]

I want to add a bit of extra spice to my businness test, and I want to know If this would be correct if you were exporting to a large company overseas and you wanted to ensure that you get paid could you buy a credit default swap to guard against non payement?

 

[wonderrman]

No, you can't. International exporting and making sure you get the money is done a bit differently ....

large international trades for which special settlement systems called Irrevocable Letters of Credit (ILC) are used. There are special difficulties when the physical transactions are large in quantity and value, when the buyer and seller are in different countries and when lengthy sea voyages are required. The buyer does not want to pay for the shipment until he is certain that he will receive it and that it meets specifications. The seller, on the other hand, does not want to ship the goods until he is certain that he will be paid.

The solution is for the buyer to go to his local bank and open an ILC in favour of the seller’s bank, or possibly his bank’s agent bank in the seller’s country. Irrevocable means just that, it cannot be cancelled once it has been issued. It is effectively a guarantee by the buyer’s bank to the seller’s bank that once the shipment arrives in the buyer’s home port and is of correct specification, the seller’s bank can pay the seller under the ILC and claim the money from the buyer’s bank.

Sourced from Alf Field.

 

[stl_08]

thanks lucky I dident put that in trying to sound smart. The teacher would of probably bought it though. She always says so much stuff wrong, especially about shares.

 

[wonderrman]

thanks lucky I dident put that in trying to sound smart. The teacher would of probably bought it though. She always says so much stuff wrong, especially about shares.

Haha yep my business teacher last year made up half the stuff I think ... it was pretty funny listening to her answers to some peoples question. What year is the class?

 

[cutz]

thanks lucky I dident put that in trying to sound smart. The teacher would of probably bought it though. She always says so much stuff wrong, especially about shares.

Wow, that sounds sooooo uncool, what sort of wrong stuff does she say about shares?

 

[stl_08]

year 12, nah it's not uncool, it's uncool when I always correct her but I do it. LOL sound like a nerd now, she just always says the market has gone down when it has gone up LOL yer that's all she says

 

[doctorj]

No, you can't. International exporting and making sure you get the money is done a bit differently ....

You should also note that trade finance is proving especially difficult in the current climate. Searching google news for recent items with the phrase 'trade finance' would be a good start in understanding why.

 

[stl_08]

You should also note that trade finance is proving especially difficult in the current climate. Searching google news for recent items with the phrase 'trade finance' would be a good start in understanding why.

Thanks searching it now

 

[stl_08]

is it due to the high cost "deals currently being offered at 300basis points over interbank refinancing rates" making it to costly to developing countries?

 

[wonderrman]

You should also note that trade finance is proving especially difficult in the current climate. Searching google news for recent items with the phrase 'trade finance' would be a good start in understanding why.

Yes I know, the quote was from an article that explains that .... http://news.goldseek.com/AlfField/1226560260.php

 

[stl_08]

cheers guys that is a really good article clears up alot and not just about the trade.

 

[beamstas]

2 days ago my corporate regulation and accountability lecturer stood in front of the whole lecture and told everyone that the share price of a company is a split of the assets on it's balance sheet.

I laughed to myself, but i think most of the people in the lecture actually believed him.

I felt like saying "Oh so that's why the share price goes down sometimes, the boss just took out some petty cash to buy some milk for his morning coffee "

 

[prawn_86]

2 days ago my corporate regulation and accountability lecturer stood in front of the whole lecture and told everyone that the share price of a company is a split of the assets on it's balance sheet.

I laughed to myself, but i think most of the people in the lecture actually believed him.

I felt like saying "Oh so that's why the share price goes down sometimes, the boss just took out some petty cash to buy some milk for his morning coffee "

Like one of my tutors saying the higher PE a stock is better and that you should buy the ones with the highest PE.

I questioned her about it and she was "going to get back to me" but never did. Uni is a breeding ground for suckers imo...

 

[doctorj]

Like one of my tutors saying the higher PE a stock is better and that you should buy the ones with the highest PE.

I questioned her about it and she was "going to get back to me" but never did. Uni is a breeding ground for suckers imo...

I remember having a similar 'spirited debate' when one of my tutors said you should buy the one with the lowest PE.

If it really was as easy as running your finger down the PE column in the newspaper and picking a stock with a low PE (or high PE), we'd all be rich.

 

[beamstas]

Like one of my tutors saying the higher PE a stock is better and that you should buy the ones with the highest PE.

I questioned her about it and she was "going to get back to me" but never did. Uni is a breeding ground for suckers imo...

Sometimes im greatful i do my own research for places where i am putting my hard earned $$$ (shares)

Imagine all the stuff i would have 'learned' if i didnt know any better

Worlds largest facepalm

 

[prawn_86]

I remember having a similar 'spirited debate' when one of my tutors said you should buy the one with the lowest PE.

If it really was as easy as running your finger down the PE column in the newspaper and picking a stock with a low PE (or high PE), we'd all be rich.

Well at least your tutor was more correct than mine. Historically low PE stocks outperform. But that was before this bear market...

If only we could skip the investing bit and jump to the rich bit