Question
c) Identify the appropriate Risk Financing Method to be employed (Select from the table below) for each circumstance outlined below. (1+1+1+1=4 marks) Company XYZ sells
c) Identify the appropriate Risk Financing Method to be employed (Select from the table below) for each circumstance outlined below. (1+1+1+1=4 marks) Company XYZ sells widgets in Alabama and Company ABC manufactures widgets in Lithuania. Company XYZ wants to import $100,000 worth of widgets manufactured by Company ABC, but Company ABC is concerned about XYZ's ability to pay for them. To address this, Company XYZ gets? The farmer plants his seeds in the spring and sells his harvest in the fall. In the intervening months, the farmer is subject to the price risk that wheat will be lower in the fall than it is now. While the farmer wants to make as much money as possible from his harvest, he does not want to speculate on the price of wheat. Goods are sold on credit by the supplier to one of its customers, amounting to $20,000. The credit granted as per the term of sale with the terms of 3/15 net 40. In the wake of the 2010 British Petroleum oil spill in the Gulf of Mexico. At that time, reports circulated that BP was insured by Guernsey-based captive subsidiary company called Jupiter Insurance and that it could receive as much as $700 million from it. Excess insurance Letter of credit Unfunded reserve Hedge Trade Credit Captive Insurance Noninsurance transfer
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