Gzel Paketleme is located in Turkey . The company is considering to purchase some machinery worth of 1 Million USD . The machinery will be used to produce some special packaging materials that will be exported to some prospect customers in Dubai. The company will be exporting 1 Million USD worth of goods to these buyers . Credit terms will be 1 year . The payment method will be O/A since these buyers only accept to buy goods if the payment method is this. The seller of the machinery , Rich Machinery is located in Germany. Gzel Paketleme estimated through his cash flow analysis that he could pay the cost of machinery only after 1 year . The supplier in Germany would accept to sell this machinery if he is fully secured through a bank guarantee . Besides, he wants to use the option of having funds from his bank by converting this receivables into cash. They agreed that the transaction would be arranged in the folllowing way ; a time draft would be drawn by the seller to the buyer who would accept the draft and then an aval would be provided by his bank who is a well known international bank ,Ing Bank. ( credit rating as being A+ by S&P , one of the rating agencies in the world ) The bank of Rich Electronics is Deutsche Bank ,a full service international bank . ( 35 points )

a) Pls. find out what could be the most appropriate trade finance instrument for the parties ( between Rich Machinery and Gzel Paketleme ) to conduct this trade effectively ? Pls , draw and explain in steps how would that work ? ( 15 points )

b) Pls refer to your answer in a part , what is the risk Rich Machinery does not want to take in this trade ? To whom is this risk transferred ? What is the role of the bank that gives aval ? ( Pls. consider the trade finance method you choose in part a ) ( 10 points )

c) What is the risk Gzel Paketleme would be taking in this trade, considering his exports to these new prospect companies ? How could he protect himself for this risk ? Pls. explain only by using only one trade finance instrument that would help him to secure his trade . ( 10 points )