International finance is the branch of economics that studies the dynamics of foreign exchange, foreign direct investment and how these affect inlcmational trade. International finance also deals with the study of international projects, international investment and the international capital flow.

Required:

a$)$ Discuss the methods of entry into a foreign market and the key risks inherent in entering and engaging in international trade $(5$ marks$)$

b$)$ Nkhosi Pie, a public Limited Company based in Zambia intends to purchase goods from Kenya wonh KSb $100,120.$ Aware that such a transaction entails forcx risk, The CEO of Nkbosi Pie approaches Zambia National Bank and is availed with the following data on

key mncrocconomic variables relating $10$ both Zambia and Kenya:

Interest rates

Rate of Inflation

Zambia

$6\%$

$15\%$

Kenya

$3\%$

Unknown

Spot Rate

$(($

$($KES$/$ZMW$)46$

i$.$ Estimate the one year forward differential on the shilling. Is the shilling trading at a

premium or discount?

u$.$ Compare and contrast a euro credit with eurc commercial paper