Unit 2:

1. Explain the methods used by the governments to promote international

trade.
● Subsidies: Financial assistance to domestic producers in the form of cash
payments, low-interest loans, tax breaks, product price supports, or other
forms.
● Export Financing: Governments can offer export financing, which includes
loans to exporters at below-market interest rates or loan guarantees in case
of default.
● Foreign Trade Zones: Designated geographic regions where merchandise is
allowed to pass through with lower customs duties or fewer customs
procedures.
● Special Government Agencies: Organize trade promotion trips and open
offices abroad to promote exports from the home country.
2. Why are trade tariffs created?
● to encourage local production
● help local firms export and thus build worldwide market share
Others:
● to protect local jobs by shielding home-country business from foreign
competition
● to encourage local production to replace imports
● to protect infant industries that are just getting started
● to reduce reliance on foreign suppliers
● to encourage local and foreign direct investment
● to reduce balance of payments problems
● to promote export activity
● to prevent foreign firms from dumping (selling goods below cost in order to
achieve market share)
● to promote political objectives such as refusing to trade with countries that
practise apartheid or deny civil liberties to their citizens
3. What are commonly used barriers?
● price-based barriers: tariff
● quantity limits: quota, embargo
● international price fixing: cartel
● financial limits: exchange controls
 ● foreign investment controls: limit on FDI or remittance of funds
4. What are non-tariff barriers to trade?
Non-tariff barriers are rules, regulations and bureaucratic red tape that delay or
preclude the purchase of foreign goods.
● quotas
● buy national’ restrictions
● customs valuation
● technical barriers
● export restraints

Unit 5:
1. For what four reasons do investors use the foreign exchange market?
- Currency conversion: Companies use the foreign exchange market to convert one
currency into another.
- Currency hedging: The practice of insuring against potential losses that result from
adverse changes in exchange rates.
- Currency arbitrage: The purchase and sale of a currency in different markets for profit.
- Currency speculation: The purchase or sale of a currency with the expectation that its
value will change and generate a profit.
2. What is the foreign exchange market?
FOREX is the market in which currencies are bought and sold and in which currency
prices are determined.
3. Distinguish between spot rate and forward rate. How is each used in the
foreign exchange market?
- Spot rate is an exchange rate that requires delivery of the traded currency within two
business days.
→ This rate is normally obtainable only by large banks and foreign exchange
brokers.
- Forward rate is the rate at which two parties agree to exchange currencies on a
specified future date.
→ Forward exchange rates represent the market's expectation of what the value of
a currency will be at some point in the future.
4. Explain the differences among currency swaps, options, and futures.
- Currency swap is the simultaneous purchase and sale of foreign exchange for two
different dates.
- Currency option is the right to exchange a specific amount of a currency on a specific
date at a specific rate.
→ It is sometimes used to acquire a needed currency. Companies often use currency
options to hedge against exchange rate risk or to obtain foreign currency.
- Currency futures contract requires the exchange of a specific amount of currency on a
specific date at a specific exchange rate.
→ It is similar to a forward contract except that none of the terms is negotiable.
Forex Futures are subject to rules and regulations and are transacted on
established exchanges.

Unit 6:
1. What are roles of banks in the four common payment methods?
• Active Role: Banks get involved in the payment process, supporting both importers
and exporters - L/C, checking the accuracy of docs and guarantee payment
• Passive Role: transfer docs and funds - DC, open account, advance payment
2. What are the risks faced by exporters in the 4 common payment
methods?
• Open account: Non-payment. The exporters lose control of the Goods
Collection: Importer may fail to accept the B/E, or dishonor the accepted B/E at
maturity. The Exporter may have to ship the goods back home.
•L/C: Few risks. Failure to present compliant docs to the bank will result in the
Exporter losing the protection of the credit
• Advance payment: No risks associated with nonpayment. The Exporter receives
payment in full before the goods are dispatched
3. What is the difference between documents against payment (D/P) and
document against acceptance (D/A)?
• D/P: The B can only receive the documents once he has paid the sight draft. The S
retains title to and control over the Goods until he gets payment
• D/A: The B can get the documents just by accepting payment on a future date. The
B writes the word "ACCEPTED" on the draft and sign it
4. How does a documentary collection differ from a letter of credit as a
means of financing international trade?
• Documentary Collection: The bank acts as an intermediary. The Banks do not verify
the documents, take risks, nor guarantee payment. The banks just control the flow of
documents.
• L/C provides increased assurance to both Exporter and Importer so long as they
fulfil their obligations. The bank not only verifies the document accuracy and
authenticity, but also guarantees payment.
5. Why would an exporter ask for a confirmed letter of credit?
The risks of issuing bank are borne by the confirming bank. If the I bank gets out of
biz, the confirming is obliged to pay the L/C
6. When do people use the 4 payment methods?
• Open account: 2 sides have long-established trading relation.
• Advance Payment: 2 sides are unfamiliar.
•L/C: The Importer's credit rating is questionable, The Exporter needs an L/C to
obtain financing.
• Documentary Collection: There is ongoing business relation between the Parties,
and the importer is situated in a politically and economically stable market.

Unit 7:
1. Distinguish need, want, demand
• Needs are basic human requirements
• Wants are needs directed to specific objects which might satisfy the need
• Demands are wants for specific products backed by an ability to pay
2. Types of digital Marketing
SEO, SEM, Email, Pay Per Click, Content, SMM, Mobile, TV/ Radio, Affiliate, Viral

Unit 8:
1. What is logistics?
It is the process of planning, Implementing and controlling the flow and storage of
goods, which aims at ensuring that the right product will be in the right place at the
right time in the most cost efficient way based on customers' needs.
2. What are the Six Rights of Logistics?
The right Goods in the right Quantities in the right Condition are delivered to the
right Place at the right Time for the right Cost.
3. What are the elements in the logistics cycle?
Major activities in the logistics cycle
● Serving customers.
● Product selection.
 ● Quantification.
● Procurement.
● Inventory management: storage and distribution.
Heart of the logistics system
● Logistics management information systems
● Other activities-organization and staffing, budgeting, supervision and
evaluation
Quality monitoring
Policy and adaptability

Unit 9:
1. Why is marine insurance required?
● High probability of risks occurring in voyage
● Carrier’s liability is very limited
● Marine cargo insurance is a custom in international trade
● It provides insurance to cover any loss or damage to goods during
transit
2. What are the risks excluded from a marine insurance policy ?
● Delay
● Ordinary leakage and breakage
● Wear and tear
● Inherent Vice
● Willful misconduct of the assured
3. What documents are typically requested for marine insurance claims?
● Original policy or certificate
● Invoices and packaging specifications
● Original bill of lading or other evidence of loss or damage
● Survey report or other evidence of loss or damage
● Landing account or weight notes at destination
● Any correspondence with the carrier or other parties
4. Explain each of the following characteristics of a typical insurance plan
a. Pooling of losses: Pooling is the spreading of losses incurred by the few over
the entire group, so that in the process, average loss is substituted for actual
 loss. In addition, pooling involves the grouping of a large number of exposure
units so that the law of large number can operate to provide a substantially
accurate prediction of future losses
b. Payment of fortuitous losses: Fortuitous loss is one that is unforeseen and
unexpected by the insured and occurs as a result of chance
c. Risk transfer: Risk transfer means that a pure risk is transferred from the
insured to the insurer, who typically is in a stronger financial position to pay
the loss than the insured
d. Indemnification: Indemnification means that the insured is restored to his or
her approximate financial position prior to occurrence of the loss
5. Explain the principle of insurance
a. Principle of indemnity
Principle of indemnity states that the insurer agrees to pay no more than the
actual amount of the loss; stated differently, the insured should not profit from a loss
● To prevent the insured from profiting from a loss
● To reduce moral hazard
b. Principle of Insurable Interest
The principle of Insurable interest states that the insured must be in a position to
lose financially if a covered loss occurs
● To prevent gambling
● To reduce moral hazard
● To measure the amount of the insured’s loss in property insurance
c. Principle of Subrogation
Subrogation means substitution of the insurer in the place of the insured for the
purpose of claiming indemnity from a third party for a loss covered by insurance.
Stated differently, the insurer is entitled to recover from a negligent third party and
loss payments made to the insured.
● To hold the negligent person responsible for the loss
● To hold down insurance rates
d. Principle of utmost good faith
Principle of utmost good faith – that is, a higher degree of honesty is imposed on
both parties to an insurance contract than is imposed on parties to other contracts.e
● To prevent the insured from collecting twice for the same loss

Open account is one of the methods of payment in international trade. What

are advantages and disadvantages of open account?
An open account is a popular payment method in international trade, where the
exporter ships goods and the importer pays at a future date, typically 30 to 90 days
later. While this method has certain advantages, it also presents significant risks for
both parties involved.

One key benefit of an open account is that it helps build trust and long-term
relationships between trading partners. By allowing the importer to receive goods
before payment, the exporter demonstrates confidence in the buyer's ability to meet
obligations. This can foster goodwill and encourage repeat business. For instance,
Samsung often offers open account terms to trusted retailers, allowing them to
stock products before making payment. This arrangement helps retailers assess
product quality and meet consumer demand without upfront financial pressure.
Additionally, open accounts improve the importer’s cash flow, as they can sell goods
and generate revenue before settling payment. Walmart uses this method with
international suppliers, enabling it to maintain liquidity and financial flexibility.

However, the open account method also carries notable risks, particularly for
exporters. The most significant risk is non-payment. Since goods are shipped before
payment, the exporter is vulnerable if the importer defaults or faces financial
difficulties. For example, in the mid-2010s, Brazil's Petrobras faced a corruption
scandal that affected its financial stability, leading many suppliers who had used
open accounts to write off millions in unpaid invoices. Another drawback is currency
exchange risk. Fluctuations in exchange rates between the time goods are shipped
and payment is received can reduce the exporter’s earnings when converting the
payment back into their currency.

In conclusion, while the open account method offers benefits such as improved cash
flow and stronger business relationships, it also poses significant risks, especially for
exporters. As such, exporters should carefully assess the reliability of their trading
partners and consider alternative payment methods to minimize these risks.
Digital marketing will replace traditional marketing in the near future. Do you
agree or disagree with this statement?

Will Digital Marketing Replace Traditional Marketing?

I disagree with the statement that digital marketing will completely replace
traditional marketing in the near future. While digital marketing has grown
significantly and offers numerous advantages, traditional marketing methods
continue to hold value and remain relevant in many industries. Instead of
replacement, a more accurate view is that both digital and traditional marketing will
coexist, complementing each other.

Firstly, traditional marketing, such as print ads, TV commercials, and billboards,

remains effective for reaching specific audiences. For example, older demographics
or individuals in areas with limited internet access still rely on traditional media. In
fact, large-scale campaigns using TV or radio can reach millions of people at once,
providing broad exposure for brands. Additionally, physical ads like brochures or
posters can have a tangible impact, especially in local or regional markets.

Secondly, certain industries still rely heavily on traditional marketing. Luxury brands,
for example, often use print magazines and high-end events to promote exclusivity
and prestige, something that digital platforms might not fully convey. Similarly,
direct mail and print ads are still widely used in real estate, automotive, and other
sectors where physical presence and trust are key.

That being said, digital marketing does offer unparalleled benefits, such as targeted
advertising, real-time analytics, and global reach. Digital platforms like social
media, email marketing, and search engine optimization allow businesses to engage
with consumers on a personal level and track campaign performance efficiently. It is
particularly effective for businesses targeting younger, tech-savvy audiences.

In conclusion, while digital marketing has transformed the marketing landscape,

traditional methods still play a vital role. Rather than replacing traditional
marketing, digital marketing enhances it, and the future will likely see a combination
of both approaches working together to reach diverse audiences and achieve
marketing goals effectively.
Is moving towards digital marketing a must for every company? Give reasons
for your answer and include any relevant examples from your own knowledge
and experience.

Is Moving Towards Digital Marketing a Must for Every Company?

Moving towards digital marketing is increasingly a must for every company in

today’s fast-paced and interconnected world. The digital landscape has transformed
the way businesses interact with consumers, and companies that fail to embrace
digital marketing risk falling behind in an increasingly competitive market.

Firstly, digital marketing provides businesses with a vast global reach. Unlike
traditional marketing methods, such as print ads or TV commercials, which are often
limited by geography and budget, digital marketing allows companies to target a
global audience. For instance, e-commerce platforms like Amazon and Shopify have
leveraged digital marketing to reach customers worldwide, boosting sales and
brand visibility. This global access is invaluable for businesses of all sizes, enabling
even small companies to compete on an international scale.

Secondly, digital marketing offers more precise targeting and better customer
engagement. Through tools like social media advertising, search engine
optimization (SEO), and email marketing, businesses can target specific audiences
based on demographics, interests, and online behaviors. For example, a fitness
brand can use Facebook ads to target health-conscious individuals in specific
locations, improving the effectiveness of their marketing spend. Furthermore,
platforms like Instagram and Twitter offer businesses opportunities to interact
directly with customers, fostering stronger relationships and enhancing brand
loyalty.

Additionally, digital marketing allows businesses to track and analyze their

performance in real time. Using analytics tools, companies can measure the success
of campaigns, track customer behavior, and make data-driven adjustments. This
real-time feedback is crucial for optimizing marketing efforts and ensuring that
resources are spent efficiently.

In conclusion, digital marketing is a necessity for businesses today. It provides

unparalleled reach, targeted marketing, and valuable customer insights, all of which
are key to staying competitive and growing in the digital age. Companies that fail to
adapt to digital marketing risk missing out on critical opportunities to engage with
consumers and expand their market presence.
Without Logistics, there is no international trade. Do you agree or disagree with
this statement?

Without Logistics, There Is No International Trade: Agree or Disagree?

I strongly agree with the statement that without logistics, there is no international
trade. Logistics, which involves the planning, implementation, and management of
the movement of goods and services, is the backbone of global commerce. Without
efficient logistics, the flow of goods between countries would be severely hindered,
making international trade nearly impossible.

Firstly, logistics plays a crucial role in ensuring that products reach international
markets in a timely and cost-effective manner. Whether it’s shipping raw materials,
finished goods, or perishables, logistics systems—such as transportation networks,
ports, warehousing, and customs management—are essential for the movement of
goods across borders. For example, without efficient maritime shipping or air
freight, countries would struggle to access foreign markets or obtain goods that are
not locally available.

Moreover, logistics helps maintain the integrity and quality of products during
transit. Cold chain logistics, for instance, is vital for transporting perishable goods
like food and pharmaceuticals. Without the proper infrastructure to monitor
temperature and humidity, such products could spoil before they reach their
destination, leading to losses and disruptions in trade.

Additionally, logistics enables global supply chains to operate smoothly. Many

industries, such as electronics and automotive, rely on parts and components
sourced from multiple countries. If logistics were ineffective or non-existent, these
supply chains would break down, causing production delays and shortages. A good
example of this is the global semiconductor shortage, which highlighted the
vulnerability of supply chains to disruptions in logistics.

In conclusion, logistics is an indispensable part of international trade. It ensures the

timely and efficient delivery of goods, supports global supply chains, and maintains
product quality. Without logistics, international trade would cease to function,
making it a vital element of the global economy.
Goods moving across international borders may face a lot of physical loss or
damage. Companies should do something to minimize such risks. Why do
businesses insure their goods against risks?

In today’s globalized economy, businesses involved in international trade are

increasingly exposed to various risks, including physical loss or damage to goods
during transit. To mitigate these risks, many companies choose to use insurance, a
critical tool for safeguarding their assets. This essay highlights the benefits of
insuring goods during international trade.

Firstly, insurance protects businesses from financial losses due to unforeseen events
such as theft, accidents, natural disasters, or mishandling during shipping. For
instance, in 2021, Vingroup, a leading Vietnamese conglomerate, faced a delay in
receiving automotive parts for its VinFast electric cars due to severe flooding. The
company’s insurance coverage allowed them to recover the costs of any potential
damage, ensuring that their production schedule was not disrupted and preventing
significant financial setbacks.

Secondly, insuring goods can enhance customer trust and satisfaction. When
businesses offer insurance on their shipments, it reassures customers that their
orders are protected. For example, Amazon provides shipping insurance, offering
customers peace of mind knowing they will receive a replacement or refund if their
products are damaged or lost. This practice builds customer loyalty and strengthens
a company’s reputation, as consumers are more likely to return to businesses that
prioritize their satisfaction and offer reliable services.

Lastly, having insurance helps businesses comply with legal and contractual
obligations. Many international contracts require sellers to insure their goods to
protect both parties’ interests. For example, logistics companies like DHL often
mandate cargo insurance as part of their shipping agreements. This ensures fairness
and accountability, as the financial burden of loss or damage is shared between
parties, preventing potential legal disputes.

In conclusion, insuring goods in international trade is essential for managing

financial risks, enhancing customer trust, and complying with legal obligations. By
investing in insurance, businesses can protect their assets, improve their market
reputation, and build strong, lasting relationships with partners and clients.
Do you agree that free trade makes rich countries richer and poor countries
poorer? Use some trade theories to support your argument.

Does Free Trade Make Rich Countries Richer and Poor Countries Poorer?

Whether free trade benefits only rich countries while leaving poor countries worse
off or not is a hotly-debated topic. From my perspective, I strongly disagree with the
statement that free trade solely makes rich countries richer and poor countries
poorer, as trade theories such as comparative advantage and Heckscher-Ohlin
suggest that all nations, both rich and poor, can benefit.

Firstly, theory of comparative advantage argues that countries should specialize in

producing goods where they have the lowest opportunity cost and trade with others
to maximize efficiency. For example, Vietnam has capitalized on its comparative
advantage in textiles and footwear, exporting these labor-intensive goods to
wealthier nations like the United States. As a result, Vietnam has experienced rapid
economic growth, transitioning from a low-income to a lower-middle-income
country within a few decades.

Secondly, the Heckscher-Ohlin model further supports this by stating that nations
export goods that use their abundant factors of production. Brazil, rich in natural
resources, exports agricultural products like soybeans and coffee, achieving
substantial economic gains. Meanwhile, developed countries like the United States
export high-tech goods, benefiting from their capital and skilled labor. This allows
both nations to specialize according to their strengths and reap mutual benefits.

However, free trade does not come without challenges. The dependency theory
highlights the risks for poor countries that rely on exporting raw materials, which
leaves them vulnerable to price fluctuations. For example, Zambia's reliance on
copper exports exposes its economy to volatility, hindering diversification and
long-term growth.

In conclusion, while free trade can potentially make rich countries richer, it does not
necessarily impoverish poorer countries. The key lies in how each country engages
with global trade and implements policies to protect its economy and promote
inclusive growth. When managed effectively, free trade can provide opportunities
for both rich and poor nations to thrive together.
Foreign exchange markets are made up of banks, forex dealers, commercial
companies, central banks, investment management firms, hedge funds, retail
forex dealers, and investors.

What are ways of making money on the foreign exchange market?

The foreign exchange (forex) market offers a range of opportunities to profit by

trading currencies, but it also involves significant risks. This global marketplace is
made up of diverse participants, including banks, investment firms, hedge funds,
commercial companies, and individual traders. Success in forex trading hinges on
understanding key strategies and managing risks effectively.

One of the most common ways to make money in forex is through currency
speculation. Traders buy a currency when its price is low and sell it when it
appreciates. For example, a trader might purchase the euro (EUR) at 1.10 against
the US dollar (USD) and sell it when the exchange rate reaches 1.15, earning a profit
from the price difference. This approach typically involves both technical and
fundamental analysis, such as examining market trends, interest rates, inflation, and
employment data.

Another strategy is arbitrage, which takes advantage of price discrepancies

between different markets or exchanges. Although rare due to the efficiency of
modern financial systems, arbitrage can offer risk-free profit if executed quickly. For
instance, if the euro is priced differently on the London and New York exchanges, a
trader could buy euros cheaply in London and sell them at a higher price in New
York. This technique is usually employed by institutional traders with advanced
systems capable of executing trades in milliseconds.

In my experience, a combination of technical and fundamental analysis is the most

effective strategy for success in forex trading. By using tools like moving averages
to time entries and exits, while also monitoring key economic reports, traders can
make more informed decisions. This balanced approach helped me navigate volatile
periods, such as during the COVID-19 pandemic, when currency markets responded
quickly to economic news and government actions.

In conclusion, the forex market offers profitable opportunities through speculation

and arbitrage, but success requires a deep understanding of market analysis and
careful risk management.