b. Explain to the CEO what forfalting is, why it is possible that forfaiting of the transaction can occur and the implication that it will have on the swap transaction. (4 marks) Provide your answers in space provided below: Question Your answer What is forfaiting? (Give an Forfaiting is a means of financing used by an exporter to get cash explanation). (3 marks) though an intermediary i.e typically bank. An importer sells promissory notes to an exporter who then sells it to a bank which buy the notes at a discount from the face value. The exporter gets paid and there is a chance the importer can default but the exporter doesn't have to worry as he already got paid from the bank Why can forfaiting occur? (1 mark] Implication on the swap transaction (State whether it impacts the swap or not and the reason for it). (1 mark)