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The Importance of the Bank in Case of Global Trade

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According to the statistical interpretation, it has been recognized that USASuperCars has earned revenue of $2,659,767.84 from its global business operations. In this regard, it has been noticed that HSBC has offered to pay a sum of $2,150,000, based on which the bank is able to have a reserve of exchange rate amounting to $509,767.84. It signifies that the revenue proportion of the company will be reduced to around 19.16 %. In this context, it can be asserted that due to the exchange rate, the overall revenue proportion can be reduced or it may be enhanced.

Moreover, the exchange rate may bring approximately 10% changes on the revenue amount in both ways, but it revealed that the bank has reserved an adequate amount in terms of security in relation to the exchange rate. Thus, it can be evidently asserted that the offer, which has been made by HSBC, is not a lucrative offer, as the revenue of USASuperCars will decrease to a substantial amount for this agreement its. The term “ risk-averse” defines not willing to take the risk. According to the given scenario, the sales manager of USASuperCars has accepted the offer, which is made by HSBC.

In this regard, the sales manager ensured its revenue margin by accepting the offer of HSBC On the other hand, the CEO of the company does not accept the offer of HSBC, which implies that the CEO of USASuperCars has tried to take risk for profit maximization, because the revenue proportion can be increased due to the favorable exchange rate. Thus, based on the given scenario it can be easily claimed that the sales manager of the USASuperCars is more “ risk-averse” .

According to the report of the Economy watch, several risks can be observed during the overseas trade in terms of economic aspects. At the same time, risk can be also observed in terms of a political context. Apart from the aforementioned factors, several other risks can be witnessed in terms of commercial aspects. Economic risks may arise due to the risk of concession, insolvency, exchange rate, and non-acceptance among others. Likewise, political risks include import and export licenses related risk, risk of uncertainty and risk of political sovereignty.

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