Q-1 Definitions

Overbought/ Long
a position in which the demand for a an asset unreasonably pushes the price of an
original asset to levels that do not support the basics
Oversold/ Short
The condition which is opposite of overbought is called oversold and short one, and the
investor sold to a price below its true value

At par
The written value, apparently on the face of any financial instrument (share, bond, bill of
exchange etc.), and sometime it is different from its market value

Option Forward
An agreement between a buyer and seller to take the transaction on the
predetermined date in the future, at a predetermined price.

Fixed forward
A security derivative contract used to buy or sell an asset at a predetermined delivery
price on a specific date in the future"



Q-3 (a)
INCORTERMS used by international trade

List of Incoterms that i know is written below;
(1) CFR Cost and Freight
(2) CIF Cost, Insurance and Freight
(3) CIP Carriage and Insurance Paid to
(4) CPT Carriage Paid to
(5) DAF Delivered At Frontier
(6) DDP Delivered Duty Paid
(7) DEQ Delivered Ex Quay
(8) DES Delivered Ex Ship
(9) EXW Ex Works
(11) FAS Free Along Ship
(12) FCA Free Carrier
(13) FOB Free on Board


Q-4 (i)
ROLES OF IMPORTERS AND EXPORTERS UNDER FOB

Duties of the exporter

1. Supply the contracted goods in conformity with the contract of sale and deliver the goods on
board the vessel named by the buyer at the named port of shipment
2. Bear all costs and risks of the goods until such time as they shall have effectively passed the
ships rail. In other words, once goods are placed on ships rail, title to the property passes to
the buyer and so risks too
3. Provide at his own expense the customary clean shipping documents as proof of delivery of
goods
4 Provide export license and pay export duty
5 Pay loading costs.

, now let us discuss about the duties of Importer under FOB terms. If delivery terms of
an international business is on Freight On Board (FOB) basis, the importers duties and
responsibilities are given under:

Duties of Importer

1. Reserve the necessary shipping space and give due notice of the same to the exporter;
2. Bear all costs and risks of the goods from the time when they shall have effectively passed
the ships rail
3. Pay freight cost
4. Pay unloading costs and
5. Pay the price as provided in the contract to exporter.

Q-4 (iI)
ROLES OF IMPORTERS AND EXPORTERS UNDER CPT

CPT Seller pays for:
1. Packing suitable for rail transport
2. Loading charges
3. Delivery to terminal
4. Customs clearance for export

CPT Buyer pays for:
1. Terminal charges terminal arrival
2. Customs clearance for import
3. Import taxes and duties
4. Unloading at destination

Q-4 (iii)
ROLES OF IMPORTERS AND EXPORTERS UNDER CIF

Seller's Responsibilities:

1. Goods - Provide the goods, commercial invoice or electronic message, and other
documentation as required by the sales contract.
2. Licenses and Customs Formalities - Obtain at own risk and cost any export licenses and
authorizations and carry out all export formalities and procedures.
3. Carriage and Insurance - Contract for and pay costs of carriage by sea or inland
waterway and insurance for 110 percent of the value of the contract to the named port
of destination. The insurance policy must allow the buyer to make claim directly from
the insurer. Deliver the insurance document to the buyer.
4. Delivery - Deliver the goods on board the named vessel at the named port and at the
date or within the time period stipulated in the sales contract.
5. Risk Transfer - Assume all risks of loss or damage to the goods until they have passed
over the ship's rail at the port of shipment.

Buyer's Responsibilities:

1. Payment - Pay for the goods as provided in the sales contract.
2. Licenses and Customs Formalities - Obtain and pay costs of all import licenses and
authorizations and carry out all import formalities.
3. Carriage and Insurance - No obligation to the seller to pay for carriage or insurance.
4. Taking Delivery - Take delivery of the goods at the port of destination as provided in the
sales contract.
5. Risk Transfer - Assume all risk of loss or damage from the time the goods have passed
over the ship's rail at the port of shipment.

Q-5 (1)
TERMS OF PAYMENT
Definition:
Accounting payment terms are the payment rules imposed by suppliers on their
customers. Payment terms are imposed to ensure that payments are received by
suppliers within a reasonable period of time. Discount terms may be allowed in order to
accelerate cash collections. A large customer may use its purchasing power to force a
supplier to agree to terms that are more favorable to the customer, such as a longer
period of time in which to pay the supplier, or relaxed rules for returning goods.

Q-5 (2) short note
Types of Payments
There are three possible components to accounting payment terms, which are:

1. Discount terms.
This is a two-part statement, where the first item is the percentage discount
allowed, and the second item is the number of days within which payment can
be made in order to receive the discount. Thus, terms of "1/10" mean that a
discount of 1% can be taken if payment is made within 10 days.
2. Net terms.
"Net" means that the full amount is due for payment. Thus, terms of "net 20"
mean that full payment is due in 20 days. The term may be abbreviated to "n"
instead of "net".
3. End of month terms.
The abbreviation "EOM" means that the payer must issue payment
within a certain number of days following the end of the month. Thus,
terms of "net 10 EOM" mean that payment must be made in full within
10 days following the end of the month.

Q-5 (a)

AIRWAYS BILL

COMPONENTS:

1. bill of lading
2. commercial invoice
3. consular invoice
4. certificate of origin
5. NAFTA certificate
6. Inspection certification
7. dock receipt and a warehouse receipt
8. destination control statement
9. Shipper's Export Declaration
10. export license
11. export packing list
12. insurance certificate


Q-5 (b) short notes
COMBINED TRANSPORT BILL OF LADING


Definition
Bill of Lading (abbreviated to B/L) is one of the MOST important documents in the whole
shipping and freight chain and although I have written several articles under the category of Bill
of Lading, I thought it would be a good idea to dedicate an (rather lengthy) entire post to this
document, so here goes.. Grab a cuppa coffee and read on..
3 basic purposes or roles:
1. Evidence of Contract of Carriage
2. Receipt of Goods
3. Document of Title to the goods

lINER BILL OF LADING

Definition
The bill of lading is a document issued by a carrier which acknowledges receipt of the cargo,
contains terms of carriage and may operate as a document of title. Taking each of these key
functions in turn:
Functions:
(a) Receipt: The B/L records the fact that the cargo has been loaded on the vessel and is
evidence of the facts stated in it.
(b) Contract of Carriage: It contains or evidences the contract of carriage
(c) Document of Title: if the bill is negotiable (as to which, see Types of B/Ls below), it is a
document of title which identifies who can demand the goods at the discharge port.

CHARTER PARTY OF BILL OF LADING

Charter party bill of lading is another type of bill of lading used under sea mode of transport. If
one shipper or a group of shippers arrange to charter their goods to final destination, a vessel is
chartered. This chartered vessel is meant to move the goods exclusively for such shipper or
shippers. In such cases, as a proof of receipt of goods, the charterer who charters the ship
issues a document of title which is called Charter party bill of lading.

SEA WAY BILL

Shipping companies issue sea waybills to shippers as a sort of proof or evidence that there is a
contract of carriage between the shipper in question and the shipping company. In order
words, the sea waybill is a document that serves as proof that the shipper actually received the
goods from the shipper and agreed to carry it to a stated destination.
Importants
1. serves an alternative for a bill of lading for the purposes of shipping goods and having
someone collect the goods on arrival at the destination port.
2. longer time to arrive because of situations such as postal delays and other unforeseen
circumstances. In this sense,
3. serves as an authorization for the goods covered by the document to be released to the
consignee named on the document. Such a precaution
4. expedite the process of offloading the cargo on arrival at their final destination

Q-6 (a)
RISK MINIMIZATION
UNDER:
DOCUMENTARY COLLECTION:
There are four types of processes

1. D/P Documents against Payment
2. D/A Documents against Acceptance
3. Clean Collection
4. Cash Against Documents

D/P Documents against Payment
The export documents and the bill of exchange provided to a collecting bank are only made
available to an importer when payment is made. The collecting bank then transfers the funds to
the seller through the remitting bank.

D/A Documents against Acceptance
The export documents and a time/usance bill of exchange are sent to a remitting bank. The
documents are then sent to a collecting bank with instructions to release the documents
against a buyers acceptance of the bill of exchange.

Clean Collection
The exporter creates a bill of exchange, which is sent without any export documents to a buyer
for collection through the remitting bank to the collecting bank. There is less security for an
exporter since the documents are sent directly to the importer.

Cash Against Documents
This process lacks the security and legal protection of a documentary collection since the
exports documents are sent through a remitting bank to a collection bank without a bill of
exchange. It is, however, still a collection through the banking system.

Q-6 (b)
RISK MINIMIZATION
UNDER:
DOCUMENTARY CREDIT:

Types of documentary credits
Availability

1. Sight payment credits
The applicable security criteria will differ depending on the form of the sight payment
credit.

2. Deferred payment credits
Under a deferred payment credit, the issuing bank and any confirming bank undertake
to effect payment on a specified later date subject to the presentation of the stipulated
documents on or before the expiry date of the documentary credit.

3. Acceptance credits
Under an acceptance credit, on presentation of the stipulated documents and a draft
drawn on the issuing or the nominated bank, the exporter receives a bill of exchange
undertaking that payment will be effected on the designated due date.

4. Negotiation credits
Under a negotiation credit, the exporter receives an advance or an agreement to
advance the funds from the negotiating bank on presentation of the stipulated
documents and, where applicable, a draft.

5. Documentary credits in transit trade
A documentary credit is also an appropriate means of meeting the security
requirements of the various parties in the transit operations of the international
trade.


Q-7 short note

Uniform Customs and Practice for Documentary Credits, UCP 500

This is the 6th edition of ICC's Uniform Customs and Practice for Documentary Credits, 1993
Revision, UCP 500, which went into force on January 1, 1994. The 49 articles of UCP 500 are a
comprehensive and practical working aid to bankers, lawyers, importers, exporters, transport
executives, educators and everyone involved in letter of credit transactions worldwide. For
ease of reference, UCP 500 keeps the same framework of the past revisions of the Uniform
Customs and Practice for Documentary Credits.

UCP 500 Changes
1. Simplifies the rules
2. Ensures that they are consistent with current market practice
3. Enhances the integrity and reliability of the documentary promise
4. Introduces the presumption of irrevocability
5. Clarifies the primary liability of the issuing bank and the confirming bank
6. Introduces a course of action to be taken on "non-documentary conditions"
7. Clearly lists the elements of acceptability for each major type of transport document


Q-8 (a)
INTERNATIONAL SETTELEMENT THROUGH BANKS
METHODS:

The four methods of payment namely
1. Advance Payments
2. Open Account System
3. Consignment Sale
4. Bill for Collection

(1) ADVANCE PAYMENT

When there is a sellers market for the goods, the Exporter can demand that the
Importer should make full advance payment before the goods are despatched.
Even though this method is the most desirable for the Exporter, the Importer has to rely
on the integrity of the Exporter and his capacity to execute the order in time.
More than that, the entire transaction is financed by the Importer in this method
thereby making the transaction more costly for him; besides exposing the Importer to
credit risks.
On account of the above factors some countries have imposed Exchange Control
restriction regarding imports.
For example in India advance payment is allowed only in respect of import of books,
periodicals, life saving payment apparatus, capital goods, machinery and a few other
items.
Bankers may stipulate that the Importers produce documentary evidence showing the
supplier demanding the advance payment. Advance payment of USD 2500/- or its
equivalent can be made for commercial imports subject to the following conditions.

(2) Open Account System

When an Exporter agrees to sell the commodity on open account system to the
Importer, he despatches the goods to the buyer directly followed by the transport
documents and an invoice requesting payment.
You may observe that the Exporter loses control over the goods completely and leaves
everything on the integrity of the buyer.
To put it in other words, the effect of this system is just opposite to advance payment
system. While open account system is most advantageous to the Importer, the Exporter
bears the entire financial and commercial risks.
This system is normally resorted to when the goods command buyers market.
The commercial risk is, to some extent minimised by taking a policy of ECGC.
To take care of the interest of the Indian Exporters, there are Exchange Control
restrictions imposed by RBI on open account export Sales.

(3) Consignment Sale

While the ownership and possession passes to the buyer in the case of open account
system, the ownership remains with the seller in the case of consignment sale.
The consignee in this case will be selling agent of the Exporter.
The goods are sold by the consignee on behalf of the Exporter and as and when the
proceeds are received, they are remitted to the Exporter.
The agent/consignee may deduct from the sale proceeds of the goods, the expresses
normally incurred such as warehousing & handling charges, Jewellery, precious stones
and engineering goods are normally sold by this method.
In the case of goods exported on consignment basis, freight and marine insurance must
be arranged in India.
Engineering Export promotion council maintains a warehouse at Rotterdam to assist
the Exporters.
The time limit for realisation of export proceeds is 15 months as against the usual 6
months.

(4) Documentary collection

In the methods mentioned above, either the Exporter benefits or the Importer benefits.
Can there be a method where the Exporter does not lose control over the goods (title to
goods) and the Importer is called the documentary collection, using the services of the
Bank
The Exporter prepares the proper financial and commercial document including the
transport document and hands over to his Banker requesting in clear terms as to how
the documents are to be delivered to the Importer at the other end.
The uniform rules for collection (International Chamber of Commerce, Publication No.
322) with effect from January 1979 form an internationally accepted code of practice
covering documentary collection.
There are four main parties to a documentary collection.

Q-8 (b)

Let us see some advantages and disadvantages of Money transferring
MT
1. Advantages of Money Transferring

A) Speed
Money transfer can be done instantly and processed within a 1 or 2 days helping to manage the
finances.

B) Security and Privacy
Immediate confirmation of money sent and received is made. Privacy is maintained individually.

C) Flexibility and Convenient.
Transfer of money takes only some minutes making it easier to take money and roam from one
location to another.

D) Good exchange rates.
Users can get the benefits of prevailing exchange rates of the country and also the bank.

E) Low transfer charges by the bank.
F) Past history system
You can check histories and present status of your transfers from anywhere in the world
G) Direct deposit facility
This reduces paper work of writing and issuing cheques.
H) Direct facility of debit and credit
Electronic payments reduce paper money and cheques as one can pay in shopping or bills by
plastic cards that help in money transfer. This reduces the strain to carry paper money in
pocket. Debit card will directly take out the required money from your bank account for which
transaction has been made.

2. Disadvantages of Money transfer.

A) Compulsory transfer fees by online services
Sometimes, online services take the advantage of having their monopoly and charge some
transfer fees in return of money transfer. Since online services are fast, one is bound to give
them the fees

B) No guarantee of secured data of credit and debit card transactions.
Sometimes hackers might infiltrate by latest software into the machines of debit and credit
cards and take out important pin or passwords and use it against you.

C) Danger of hacking of bank accounts and passwords
The hackers can infiltrate into bank account softwares and websites and take your account data
and passwords and use it against you.
TT
Advantages of TT
1. Fast: The payments transferred with bank wire transfers are fast and do not require a
long period of time to be completed. For example: Western Union enables individuals to
send money through the high speed service.
2. Secure: In contrast to cheque and postal payments, bank wire transferring enables
customers to transfer money through a highly secure platform.
3. Accessible: As a traditional method of money transferring, bank wires are accessible
across the globe. The service is available at banks, call centers and many other
convenience stores worldwide.
4. Privacy: As this money transfer is exclusively between two bank accounts, the privacy of
senders and receivers is of the utmost importance. SWIFT number codes are provided in
order to receive the payments, which add more privacy and security to this form of
money transfer.
Drawbacks of TT
1. The transfer can get lost.
2. Numbers can be transposed.
3. You can miss that day's deadline for wiring, and it won't go out until the following day.
4. The manager who needs to approve the wire could be out.

SWIFT SYSTEM
Advantages of SWIFT

SWIFT helps reduce complexity and cut costs
SWIFT connectivity provides corporates with many advantages, including improved visibility of
their cash positions, standardisation of bank-agnostic payment processes and improved STP
rates.
streamline processes and simplifies complexity in order to cut costs and increase the companys
value. Hence, SWIFT for corporates is a compelling choice as it tackles precisely these
challenges. However,
Drivers such as ISO 20022 XML messaging for cash management or eBAM are also suitable for
other means of connectivity.
Disadvantage of SWIFT
some caution is still advised. Given the investment needed to take full advantage of the
benefits that SWIFT has to offer, it continues to be a solution that is best suited for corporates
that are connecting to multiple banks.
Many benefits may be reaped through the available connectivity options in the market outside
of SWIFT, as long as the number of banking partners is very limited.


Q-9 Detailed note
THE FUTURE OF EDI

Electronic Data Interchange (EDI)in existence for 25 yearsis the stable component of
conducting electronic commerce (EC) on the Internet. Technology has experienced tremendous
growth during this time, making EDI an essential tool for businesses in todays global
marketplace. Two significant factors contributed to this success: the Internet and
standardization.

The development of X12, the principal standard for EDI transactions today, has had a profound
impact on the growth of electronic commerce. As electronic commerce gained popularity, each
industry developed its own standards of electronic communication. However, this diversity
limited the ability to conduct electronic commerce among businesses that relied on different
protocols. Organizations using EDI solved this problem by making one common standard. X12
caused enormous expansion in the use of EDI. That expansion includes service industries such
as finance, health care, and insurance.

EDI is contributing not just to interindustry growth, but to increased trade between countries.
Until EDI became prevalent, many organizations involved in international business were not
able to electronically communicate critical business documents such as advance ship notices or
custom forms. Today these transactions take place routinely and seamlessly, helping increase
productivity while reducing costs and administrative tasks.

The future of EDI is clear. Now that electronic commerce on the Internet is predicted to grow to
a multibillion dollar industry by the year 2000, EDI and the X12 standards will become the
mainstay for this growth. The emergence of X12 served to increase EDI compatibility with
Internet protocols. As a result, EDI is increasingly accessible through this network. With simply a
computer and an on-line browser, businesses can link into secure EDI networks for a minimal
investment. By engaging in EDI through the Internet, small and medium-sized firms can
compete for business on a level playing field with large organizations; expand their market
globally; and improve relationships with their current trading partners.

The use of X12 and the Internet is eliminating the traditional barriers for entry to EDI, such as
large cost and trading volume requirements and proprietary software. As a result, new
companies and industries are using electronic commerce to gain a competitive advantage in
todays marketplace.

Q-10 Detailed note

Factors Influence Forward Exchange Rates and Spot Rates


There are some factors that can have great influence on spot and forward exchange rates in the
forex market. here are some major ones.
(1) economic health of a country is likely to influence the value of its currency, which will in
turn influence the exchange rate.
(2) political and military turmoil may change the exchange rates greatly. Thirdly, government
intervention can adjust the exchange rates.
(3 ) speculation plays an imporant role in the forex market and can greatly influence the
exchage rates.
(4) supply and demand of the currencies. Supply and demand of the currencies are influenced
by several economical factors, foreign trade, political stability, domestic debt levels, monetary
policy, central bank and the activities of international investors.
(5) Capital flows, given their size and mobility are of great importance in determining exchange
rates.
(6)Your countries trade in goods and services also impact the currency rate thus investors keep
an eye on the trade flow of both the countries whose currencies are being traded.