Raysut Cement Company, one of the leading producers and exporters of cement in Oman, received an order from Khaleej Construction Company for 10,000 tons of cement. Raysut cement quoted a price of 1200 USD per ton to Khaleej Construction Company. Both the companies have been dealing with each other in the past and now Khaleej is asking Raysut Cement for 90 days credit. The export manager of Raysut Cement wants to use a Banker's Acceptance. Current annual interest rate on banker's acceptances is 10%. The bankers for the two parties are: Oman National Bank for Raysut Cement and Madina Commercial Bank for Khaleej Construction Company. Answer the following questions with reference to the above case: 1. What type of draft is used: time or sight 2. Who prepares the draft? 3. Which party accepts the draft? 4. How much money (in USD) will Raysut Cement receive -full amount or less ? 5. Which party will open an LC 6. Who will be the beneficiary 7. What is the role played by the money market investors in the above deal. 8. How much money will the money market investor pay ? Full amount or less? What are the risks to the following parties in the above case: 9. Raysut Cement Company 10. Khaleej Construction Company 11. Oman National Bank 12. Madina Commercial Bank
Raysut Cement Company, one of the leading producers and exporters of cement in Oman, received an order from Khaleej Construction Company for 10,000 tons of cement. Raysut cement quoted a price of 1200 USD per ton to Khaleej Construction Company. Both the companies have been dealing with each other in the past and now Khaleej is asking Raysut Cement for 90 days credit. The export manager of Raysut Cement wants to use a Banker's Acceptance. Current annual interest rate on banker's acceptances is 10%. The bankers for the two parties are: Oman National Bank for Raysut Cement and Madina Commercial Bank for Khaleej Construction Company. Answer the following questions with reference to the above case: 1. What type of draft is used: time or sight 2. Who prepares the draft? 3. Which party accepts the draft? 4. How much money (in USD) will Raysut Cement receive -full amount or less ? 5. Which party will open an LC 6. Who will be the beneficiary 7. What is the role played by the money market investors in the above deal. 8. How much money will the money market investor pay ? Full amount or less? What are the risks to the following parties in the above case: 9. Raysut Cement Company 10. Khaleej Construction Company 11. Oman National Bank 12. Madina Commercial Bank
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Raysut Cement Company, one of the leading
producers and exporters of cement in Oman,
received an order from Khaleej Construction
Company for 10,000 tons of cement. Raysut cement
quoted a price of 1200 USD per ton to Khaleej
Construction Company. Both the companies have
been dealing with each other in the past and now
Khaleej is asking Raysut Cement for 90 days credit.
The export manager of Raysut Cement wants to use
a Banker's Acceptance. Current annual interest rate
on banker's acceptances is 10%. The bankers for
the two parties are: Oman National Bank for Raysut
Cement and Madina Commercial Bank for Khaleej
Construction Company.
Answer the following questions with reference to the
above case:
1. What type of draft is used: time or sight
2. Who prepares the draft?
3. Which party accepts the draft?
4. How much money (in USD) will Raysut Cement
receive -full amount or less ?
5. Which party will open an LC
6. Who will be the beneficiary
7. What is the role played by the money market
investors in the above deal.
8. How much money will the money market investor
pay ? Full amount or less?
What are the risks to the following parties in the
above case:
9. Raysut Cement Company
10. Khaleej Construction Company
11. Oman National Bank
12. Madina Commercial Bank
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