CASE STUDY

Albilad & Co is a growing trading business providing the specific needs of its individual customers. In recent years, it has recorded higher benefits from its niche position as a provider for customized multi requirements. All the credit goes to the young and multi-talented entrepreneur Mr. Albilad, who, however is a person who has not received any basic education in business. It was only his urge to grow in life and the hardworking nature, made him a promising business man and lead to higher profits. As a part of his expansion programs, he is thinking to import high quality supplies to start exporting his products. Still, his ignorance on business or trade finance holds him many a time backwards. He intends to know money and capital markets which, in his belief, are some spots from where money or capital can be availed. Mr. Albilad knew there would be extra challenges working with foreign suppliers and buyers and would like to be prepared in advance. He is requesting you to explain on financial markets as sources of finance and the foreign exchange market. In this case, you are asked to write a report to Albilad in line with the information asked below. Your skills to use the understanding of the concepts and the ability to apply them in practice have to be exhibited.

Q. Give an account on the functioning of the foreign exchange market that can be used for his future plans where forward and option contracts can also be employed as strategies to manage risks in hedging