Seminar case study

Seminar case study

´╗┐Part A
Question 1
a) With respect to the given caselet, examine the concern and possible risks situations to
i) Zairama Trading (5m)
The possible risk will be the crime risk. According to the case study, Zarima Trading has to pay 75% cash deposit for the consignment to them then only the manufacturers will make delivery to customers. There is possibility that the manufacturers do not deliver the furniture to the customers.
Besides that, the Spanish dealer had ordered 25 sets of furniture to deliver to his country in 3 months without making any payment or signing any contract. The dealer left his name card so that Zarima Trading can contact his purchasing executive. There is possibility of fraud risk as there is no evidence that the dealer really works in the company and whether the company existed.
Default risk is possible as the dealer can default in payment after receiving the furniture.
Operational risk might appear as the company might experience not enough money to roll over as most of the cash had been paid to the manufacturers
ii) The Bank (5m)
The bank might experience default risk. Zairama Trading might fail in paying its debt due to failure in management.
The bank may experience crime risk too as the Spain furniture dealer may involve in forgery which is imitating the documents without being noticed.
Currency risk may appear as the bank needs to pay Euro to the Spain dealer instead of payment by using Ringgit Malaysia.
b) Specific to the given caselet and as a banker, identify 5 products that your bank could offer to Zairama Trading. For each of the products, indicate how it could be help to the customer and what kind of income your bank could potentially earned from it. (10m)
i) Letter of Credit
Letter of credit is used where the Spain dealer requested to pay Zairama Trading a stated amount against presentation of stipulated documents and in full compliance of the terms and conditions of the credit. In case where the Spain dealer failed...

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