Curriculum Guideline

International Trade Finance

Effective Date:
Course
Discontinued
No
Course Code
BUSN 3200
Descriptive
International Trade Finance
Department
Business
Faculty
Commerce & Business Administration
Credits
3.00
Start Date
End Term
201720
PLAR
No
Semester Length
4 months
Max Class Size
35
Contact Hours
Lecture: 4 Hours per week Number of Weeks per Semester: 15 weeks Total: 15 Weeks X 4 Hours per Week = 60 Hours
Method Of Instruction
Lecture
Lab
Seminar
Methods Of Instruction

Material will be presented within a lecture/discussion environment.

Course Description
This course presents the basic elements of 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 methods used to estimate cash flows and formulate scenario and sensitivity analyses for a trade project. Finally, the course aims to equip students with the tools necessary to analyze and understand financial statements according to different accounting standards and to construct financing proposals based on different time horizons ranging from short to long term.
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
  • Other factors to consider: exchange rate fluctuations, inflation, financing arrangements, etc.
  • Adjusting project assessment for risk (sensitivity analysis)
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.
Means of Assessment
1. Term Examinations (2-3)    30-45%
2. Final Examination 30%
3. Assignments (6-8) 15-20%
4. Project 10-20%
Total: 100%

Note: Students must achieve a grade of at least 50% of the combined examinations to pass the course.

Textbook Materials

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.

Or any alternative textbook approved by the Business Department.

Prerequisites

ACCT 1210 or ACCT 1235, and FINC 1231 (minimum of C for all courses)

Corequisites

Nil

Equivalencies

Nil

Which Prerequisite

Nil