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Mr. Bob Ferguson, senior director of your customer, Adelaide Ltd is negotiating for the first time with suppliers abroad to purchase some outwear garments, which are at present unobtainable in the UK. The terms of payment which the sellers have suggested are a 90 days’ sight draft D/A with presentation through a UK bank. You understand that the presentation will be subject to Uniform Rules for Collections (and the shipping terms are to be CFR UK port). Your customer believes that he will have the opportunity of examining the goods when they are received in the UK and that, if they are not in accordance with specification, he can refuse the goods and will not be liable to pay the sellers, since all charges will be against the goods.
Required
a) Write brief notes on the terms of payment mentioned above; [4 marks]
b) Indicate the instructions you would expect to see on the collection order; [8 marks]
c) What would say to the suggestion by Mr. Bob Ferguson that, if goods were not in accordance with specification, the company could refuse to take up and pay for them? [6 marks]
d) How can the drawee obtain a measure of protection with D/A collections? [2 marks] [Total Marks 20]
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Your customer, Adonteng Traders Limited has finished all the registration formalities to take advantage under the new continental trading booming in Africa. Specializing in export of food throughout the continent, Adonteng Traders have negotiated with South African buyers for supply of assorted foodstuff. The arrangement allows them to draw bill of exchange on buyers immediately after shipment for full payment after 90 days. Because of restricted profit margins over the past few months due to the Russian-Ukraine problem, and a shortage of working capital, the customers called to see you on 30 March to seek your advice on how best they can finance this transaction worth USD250, 000 falling due on 30 June. The credibility of the South African buyers is highly undoubted. Adonteng Traders are seeking funding from your bank for three months in either Ghana Cedi equivalent or USD250, 000 and would pay off when final proceeds are due from the buyers. Additional information available on 30 March is as follows:
(i) USD/GHS
Spot 7.7120 7.7160
1 month forward 0.035 0.043 Cedis disc
2 months forward 0.051 0.063 Cedis disc
3 months forward 0.060 0.065 Cedis disc
(ii) Base rate is 19.0%
(iii) US 3 month LIBOR rate is 5.25%
(iv) Adonteng Traders is borrowing dollars from your US correspondent bank at 1.5% over US LIBOR rate.
(v) For interest on USD borrowing, kindly use mid-rate to convert.
(vi) Your customers do not purchase goods for which they have to pay in foreign currency.
REQUIRED:
(a) By what methods can your customers be protected from foreign exchange risks whilst preserving their profit margins? [2 marks]
(b) Outline any contractual obligations in respect of foreign exchange that your customers would have to undertake. [2 marks]
(c) Show by calculation the proceeds of each method proposed in the answer to
(a) above, and the cedis proceeds which each method would produce, stating which of the two options is better for Adonteng Traders. [10 marks]
(d) Set out a formula which your customers would use to compare cedis and foreign
currency borrowing costs, taking into account, where appropriate, the advantages or disadvantages of forward cover. [6 marks]
Notes: (2) Base your calculations on a 30 day month and a 360 day year.
[Total Marks 20]
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Find Related Questions by Tags, levels, etc.
Find Related Questions by Tags, levels, etc.
A) Define a promissory note.
B) Indicate the differences between a promissory note and a bill of exchange 12 marks
C) Outline any four requirements of a valid endorsement.
D) The endorser of a bill of exchange makes certain promises and admissions to the holder of a bill. Describe briefly these promises and admissions.
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Find Related Questions by Tags, levels, etc.
(a) State FOUR characteristics of a negotiable instrument. (4 Marks)
(b) Mr. Eddie is a customer of Perfect Bank Limited. He issued a cheque for the sum of N20,000 to Mr. Jossy. At the time of issuing the cheque, his account was in credit to the tune of N150,000. The cheque was dishonored by the bank. Mr. Eddie wants to sue the bank. You are required to advise Mr. Eddie. (5 Marks)
(c) Enumerate THREE ways by which a Will may be revoked. (3 Marks)
(d) State the parties to a Bill of Exchange. (3 Marks)
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Find Related Questions by Tags, levels, etc.
Find Related Questions by Tags, levels, etc.
Find Related Questions by Tags, levels, etc.
Mr. Bob Ferguson, senior director of your customer, Adelaide Ltd is negotiating for the first time with suppliers abroad to purchase some outwear garments, which are at present unobtainable in the UK. The terms of payment which the sellers have suggested are a 90 days’ sight draft D/A with presentation through a UK bank. You understand that the presentation will be subject to Uniform Rules for Collections (and the shipping terms are to be CFR UK port). Your customer believes that he will have the opportunity of examining the goods when they are received in the UK and that, if they are not in accordance with specification, he can refuse the goods and will not be liable to pay the sellers, since all charges will be against the goods.
Required
a) Write brief notes on the terms of payment mentioned above; [4 marks]
b) Indicate the instructions you would expect to see on the collection order; [8 marks]
c) What would say to the suggestion by Mr. Bob Ferguson that, if goods were not in accordance with specification, the company could refuse to take up and pay for them? [6 marks]
d) How can the drawee obtain a measure of protection with D/A collections? [2 marks] [Total Marks 20]
Find Related Questions by Tags, levels, etc.
Your customer, Adonteng Traders Limited has finished all the registration formalities to take advantage under the new continental trading booming in Africa. Specializing in export of food throughout the continent, Adonteng Traders have negotiated with South African buyers for supply of assorted foodstuff. The arrangement allows them to draw bill of exchange on buyers immediately after shipment for full payment after 90 days. Because of restricted profit margins over the past few months due to the Russian-Ukraine problem, and a shortage of working capital, the customers called to see you on 30 March to seek your advice on how best they can finance this transaction worth USD250, 000 falling due on 30 June. The credibility of the South African buyers is highly undoubted. Adonteng Traders are seeking funding from your bank for three months in either Ghana Cedi equivalent or USD250, 000 and would pay off when final proceeds are due from the buyers. Additional information available on 30 March is as follows:
(i) USD/GHS
Spot 7.7120 7.7160
1 month forward 0.035 0.043 Cedis disc
2 months forward 0.051 0.063 Cedis disc
3 months forward 0.060 0.065 Cedis disc
(ii) Base rate is 19.0%
(iii) US 3 month LIBOR rate is 5.25%
(iv) Adonteng Traders is borrowing dollars from your US correspondent bank at 1.5% over US LIBOR rate.
(v) For interest on USD borrowing, kindly use mid-rate to convert.
(vi) Your customers do not purchase goods for which they have to pay in foreign currency.
REQUIRED:
(a) By what methods can your customers be protected from foreign exchange risks whilst preserving their profit margins? [2 marks]
(b) Outline any contractual obligations in respect of foreign exchange that your customers would have to undertake. [2 marks]
(c) Show by calculation the proceeds of each method proposed in the answer to
(a) above, and the cedis proceeds which each method would produce, stating which of the two options is better for Adonteng Traders. [10 marks]
(d) Set out a formula which your customers would use to compare cedis and foreign
currency borrowing costs, taking into account, where appropriate, the advantages or disadvantages of forward cover. [6 marks]
Notes: (2) Base your calculations on a 30 day month and a 360 day year.
[Total Marks 20]
Find Related Questions by Tags, levels, etc.
Find Related Questions by Tags, levels, etc.
Find Related Questions by Tags, levels, etc.
A) Define a promissory note.
B) Indicate the differences between a promissory note and a bill of exchange 12 marks
C) Outline any four requirements of a valid endorsement.
D) The endorser of a bill of exchange makes certain promises and admissions to the holder of a bill. Describe briefly these promises and admissions.
Find Related Questions by Tags, levels, etc.
Find Related Questions by Tags, levels, etc.
(a) State FOUR characteristics of a negotiable instrument. (4 Marks)
(b) Mr. Eddie is a customer of Perfect Bank Limited. He issued a cheque for the sum of N20,000 to Mr. Jossy. At the time of issuing the cheque, his account was in credit to the tune of N150,000. The cheque was dishonored by the bank. Mr. Eddie wants to sue the bank. You are required to advise Mr. Eddie. (5 Marks)
(c) Enumerate THREE ways by which a Will may be revoked. (3 Marks)
(d) State the parties to a Bill of Exchange. (3 Marks)
Find Related Questions by Tags, levels, etc.
Find Related Questions by Tags, levels, etc.
Find Related Questions by Tags, levels, etc.
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