Question

What factors determine capital needs and financing alternatives in export-import trade?

Discuss the various methods in which a letter of credit can be used to finance exports.

State the typical steps involved in export factoring.

Discuss the role of OPIC in promoting U.S. exports.

State some of the programs available to promote U.S. agricultural exports.

Answer 1

1. Ans: The factors that determine capital needs and financing alternatives in export-import trade are as follows: the stage of evolution, ownership structure, distribution channel choice as well by other relevant factors. Those companies which are incorporated prefer equity financing over debt financing the reason being their greater incentive to take on risky ventures. Those firms which are younger take non-debt rather than debt financing, as the age increases the firm is more likely to get debt financing
while as those firms which have a volatile cash flow, low liquidation value but high growth opportunities are more likely to get equity than debt, except if the business has high liquidation value, then it’s more likely to get debt rather than equity.