Question 1

From an exporter's perspective, why is an offset more attractive than a straight counterpurchase agreement?

Accepted Answer

A)  It is the simplest countertrade arrangement. 
B)  It gives the exporter greater flexibility to choose the goods that it wishes to purchase. 
C)  It allows the use of a specialized third-party trading house. 
D)  It gives the exporter counterpurchase credits, which can be used in another country. 
E)  It allows direct exchange of goods and/or services between two parties without a cash transaction. 
A)  It is the simplest countertrade arrangement. 
B)  It gives the exporter greater flexibility to choose the goods that it wishes to purchase. 
C)  It allows the use of a specialized third-party trading house. 
D)  It gives the exporter counterpurchase credits, which can be used in another country. 
E)  It allows direct exchange of goods and/or services between two parties without a cash transaction. B

Question 2

How does the Small Business Administration (SBA) help potential exporters?

Accepted Answer

The Small Business Administration (SBA) is a government organization that helps potential exporters. The SBA employs 76 district international trade officers and 10 regional international trade officers throughout the United States as well as a 10-person international trade staff in Washington, D.C. Through its Service Corps of Retired Executives (SCORE) program, the SBA oversees some 11,500 volunteers with international trade experience to provide one-on-one counseling to active and new-to-export businesses. The SBA also coordinates the Export Legal Assistance Network (ELAN), a nationwide group of international trade attorneys who provide free initial consultations to small businesses on export-related matters.

Question 3

A common pitfall that novice exporters come across involves

Accepted Answer

A)  poor understanding of the domestic market. 
B)  low unit costs. 
C)  increased economies of scale. 
D)  problems securing financing. 
E)  familiar distribution systems. 
A)  poor understanding of the domestic market. 
B)  low unit costs. 
C)  increased economies of scale. 
D)  problems securing financing. 
E)  familiar distribution systems. D

Question 4

The Small Business Administration coordinates a group of ________ in the ELAN program who provide free initial consultations to small businesses on export matters.

Accepted Answer

A)  engineers 
B)  politicians 
C)  accountants 
D)  attorneys 
E)  networkers 
A)  engineers 
B)  politicians 
C)  accountants 
D)  attorneys 
E)  networkers

Question 5

A firm sells some products to a foreign country. The foreign country pays the firm in dollars but in exchange the firm agrees to spend some of the proceeds from the sale on textiles produced by the foreign country. What type of countertrade arrangement are the two parties engaged in?

Accepted Answer

A)  switch trading 
B)  buyback 
C)  counterpurchase 
D)  barter 
E)  compensation 
A)  switch trading 
B)  buyback 
C)  counterpurchase 
D)  barter 
E)  compensation

Question 6

Countertrade's main attraction is that it can give a firm a way to finance an export deal when other means are not available.

Accepted Answer

A) True 
 B)False

Question 7

To cater to the growing demand for luxury automobiles, Italy agrees to buy 5,000 cars from Comfort Cars Inc. in exchange for 5,000 barrels of oil. Since Comfort Cars Inc. is not seen as creditworthy, Italy decides to make this a one-time-only deal. What form of countertrade is Italy using?

Accepted Answer

A)  counterpurchase 
B)  offset 
C)  switch trading 
D)  barter 
E)  buyback 
A)  counterpurchase 
B)  offset 
C)  switch trading 
D)  barter 
E)  buyback

Question 8

In the United States, export credit insurance is provided by the

Accepted Answer

A)  Export-Import Bank. 
B)  Bank of New York. 
C)  Foreign Credit Insurance Association. 
D)  Federal Deposit Insurance Corporation. 
E)  Federal Reserve Bank. 
A)  Export-Import Bank. 
B)  Bank of New York. 
C)  Foreign Credit Insurance Association. 
D)  Federal Deposit Insurance Corporation. 
E)  Federal Reserve Bank.

Question 9

A U.S. company would invest in export credit insurance when it

Accepted Answer

A)  is exposed to the risk that an importer may default on payment. 
B)  is dealing in a country that has a nonconvertible currency. 
C)  is unable to obtain any pre-export financing. 
D)  has received a letter of credit from the importer's bank. 
E)  has to enter a barter-like agreement. 
A)  is exposed to the risk that an importer may default on payment. 
B)  is dealing in a country that has a nonconvertible currency. 
C)  is unable to obtain any pre-export financing. 
D)  has received a letter of credit from the importer's bank. 
E)  has to enter a barter-like agreement.

Question 10

Once accepted by the drawee, a time draft becomes a(n)

Accepted Answer

A)  asset for the drawee. 
B)  in-transit bill. 
C)  promise to pay by the accepting party. 
D)  bill of lading. 
E)  letter of credit held by the bank. 
A)  asset for the drawee. 
B)  in-transit bill. 
C)  promise to pay by the accepting party. 
D)  bill of lading. 
E)  letter of credit held by the bank.

Question 11

A countertrade indicates the exchange of money for goods and services.

Accepted Answer

A) True 
 B)False

Question 12

Mulch-Rite Inc., based in Germany, has contracted with a company in Italy to export twenty tons of mulch. Mulch-Rite has written an order requesting that the Italian company pay €15,000 by June 15 prior to the shipping date. This order is an example of a

Accepted Answer

A)  bill of lading. 
B)  draft. 
C)  letter of credit. 
D)  counterpurchase. 
E)  buyback. 
A)  bill of lading. 
B)  draft. 
C)  letter of credit. 
D)  counterpurchase. 
E)  buyback.

Question 13

It often makes sense for a firm to enter a foreign market on a large scale to reduce the costs of any subsequent failure.

Accepted Answer

A) True 
 B)False

Question 14

In domestic trade transactions, a buyer can often obtain possession of merchandise without signing a formal document acknowledging his or her obligation to pay.

Accepted Answer

A) True 
 B)False

Question 15

Exporting is nearly always a way to increase the revenue and profit base of a company because

Accepted Answer

A)  there is little competition in the international market. 
B)  foreign governments encourage imports from other countries. 
C)  international markets are less complex than their domestic counterparts. 
D)  the international market is much larger than the domestic market. 
E)  it does not involve wasting resources on paperwork. 
A)  there is little competition in the international market. 
B)  foreign governments encourage imports from other countries. 
C)  international markets are less complex than their domestic counterparts. 
D)  the international market is much larger than the domestic market. 
E)  it does not involve wasting resources on paperwork.

Question 16

Peterson Manufacturing wants to import a machine from Germany. However, the company's head of manufacturing is reluctant to spend the time required to obtain a letter of credit that the German exporter insists on. You are the company's CFO. What advantage of a letter of credit will help convince the head of manufacturing that this is worthwhile?

Accepted Answer

A)  The importer does not have to pay for the merchandise until the documents have arrived. 
B)  Obtaining pre-export financing becomes easier. 
C)  It helps the importer to get goods for a lower price. 
D)  It results in lower shipping costs. 
E)  The importer does not have to pay the third party a fee for facilitating the transaction. 
A)  The importer does not have to pay for the merchandise until the documents have arrived. 
B)  Obtaining pre-export financing becomes easier. 
C)  It helps the importer to get goods for a lower price. 
D)  It results in lower shipping costs. 
E)  The importer does not have to pay the third party a fee for facilitating the transaction.

Question 17

Manatee Products, a U.S. company, is exporting to a Japanese company. The two parties agree on a draft, but Manatee Products wants it to be a draft that is payable on presentation to the Japanese company. Manatee Products is asking for a(n)

Accepted Answer

A)  bill of lading. 
B)  sight draft. 
C)  letter of credit. 
D)  time draft. 
E)  offset. 
A)  bill of lading. 
B)  sight draft. 
C)  letter of credit. 
D)  time draft. 
E)  offset.

Question 18

The type of countertrade where a firm agrees to purchase a certain amount of materials back from a country to which a sale is made is called

Accepted Answer

A)  barter. 
B)  counterpurchase. 
C)  compensation. 
D)  switch trading. 
E)  buyback. 
A)  barter. 
B)  counterpurchase. 
C)  compensation. 
D)  switch trading. 
E)  buyback.

Question 19

A range of barterlike agreements by which goods and services are traded for other goods and services when they cannot be traded for money is known as

Accepted Answer

A)  countertrade. 
B)  carry trade. 
C)  free trade. 
D)  counter sale. 
E)  countervailing duty. 
A)  countertrade. 
B)  carry trade. 
C)  free trade. 
D)  counter sale. 
E)  countervailing duty.

Question 20

Describe the types of companies that benefit most from countertrade.

Accepted Answer

Countertrade is most attractive to large

From an exporter's perspective, why is an offset more attractive than a straight counterpurchase agreement?

How does the Small Business Administration (SBA) help potential exporters?

A common pitfall that novice exporters come across involves

The Small Business Administration coordinates a group of ________ in the ELAN program who provide free initial consultations to small businesses on export matters.

A firm sells some products to a foreign country. The foreign country pays the firm in dollars but in exchange the firm agrees to spend some of the proceeds from the sale on textiles produced by the foreign country. What type of countertrade arrangement are the two parties engaged in?

Countertrade's main attraction is that it can give a firm a way to finance an export deal when other means are not available.

To cater to the growing demand for luxury automobiles, Italy agrees to buy 5,000 cars from Comfort Cars Inc. in exchange for 5,000 barrels of oil. Since Comfort Cars Inc. is not seen as creditworthy, Italy decides to make this a one-time-only deal. What form of countertrade is Italy using?

In the United States, export credit insurance is provided by the

A U.S. company would invest in export credit insurance when it

Once accepted by the drawee, a time draft becomes a(n)

A countertrade indicates the exchange of money for goods and services.

Mulch-Rite Inc., based in Germany, has contracted with a company in Italy to export twenty tons of mulch. Mulch-Rite has written an order requesting that the Italian company pay €15,000 by June 15 prior to the shipping date. This order is an example of a

It often makes sense for a firm to enter a foreign market on a large scale to reduce the costs of any subsequent failure.

In domestic trade transactions, a buyer can often obtain possession of merchandise without signing a formal document acknowledging his or her obligation to pay.

Exporting is nearly always a way to increase the revenue and profit base of a company because

Manatee Products, a U.S. company, is exporting to a Japanese company. The two parties agree on a draft, but Manatee Products wants it to be a draft that is payable on presentation to the Japanese company. Manatee Products is asking for a(n)

The type of countertrade where a firm agrees to purchase a certain amount of materials back from a country to which a sale is made is called

A range of barterlike agreements by which goods and services are traded for other goods and services when they cannot be traded for money is known as

Describe the types of companies that benefit most from countertrade.

Globalization

National Differences in Political, Economic, and Legal Systems

National Differences in Economic Development

Differences in Culture

Ethics, Corporate Social Responsibility, and Sustainability

International Trade Theory

Government Policy and International Trade

Foreign Direct Investment

Regional Economic Integration

The Foreign Exchange Market

The International Monetary System

The Strategy of International Business

Entering Foreign Markets

Global Production and Supply Chain Management

Global Marketing and RD

Global Human Resource Management

Filters

Exam 14: Exporting, Importing, and Countertrade

From an exporter's perspective, why is an offset more attractive than a straight counterpurchase agreement?

How does the Small Business Administration (SBA) help potential exporters?

A common pitfall that novice exporters come across involves

The Small Business Administration coordinates a group of ________ in the ELAN program who provide free initial consultations to small businesses on export matters.

A firm sells some products to a foreign country. The foreign country pays the firm in dollars but in exchange the firm agrees to spend some of the proceeds from the sale on textiles produced by the foreign country. What type of countertrade arrangement are the two parties engaged in?

Countertrade's main attraction is that it can give a firm a way to finance an export deal when other means are not available.

To cater to the growing demand for luxury automobiles, Italy agrees to buy 5,000 cars from Comfort Cars Inc. in exchange for 5,000 barrels of oil. Since Comfort Cars Inc. is not seen as creditworthy, Italy decides to make this a one-time-only deal. What form of countertrade is Italy using?

In the United States, export credit insurance is provided by the

A U.S. company would invest in export credit insurance when it

Once accepted by the drawee, a time draft becomes a(n)

A countertrade indicates the exchange of money for goods and services.

Mulch-Rite Inc., based in Germany, has contracted with a company in Italy to export twenty tons of mulch. Mulch-Rite has written an order requesting that the Italian company pay €15,000 by June 15 prior to the shipping date. This order is an example of a

It often makes sense for a firm to enter a foreign market on a large scale to reduce the costs of any subsequent failure.

In domestic trade transactions, a buyer can often obtain possession of merchandise without signing a formal document acknowledging his or her obligation to pay.

Exporting is nearly always a way to increase the revenue and profit base of a company because

Manatee Products, a U.S. company, is exporting to a Japanese company. The two parties agree on a draft, but Manatee Products wants it to be a draft that is payable on presentation to the Japanese company. Manatee Products is asking for a(n)

The type of countertrade where a firm agrees to purchase a certain amount of materials back from a country to which a sale is made is called

A range of barterlike agreements by which goods and services are traded for other goods and services when they cannot be traded for money is known as

Describe the types of companies that benefit most from countertrade.

Globalization

National Differences in Political, Economic, and Legal Systems

National Differences in Economic Development

Differences in Culture

Ethics, Corporate Social Responsibility, and Sustainability

International Trade Theory

Government Policy and International Trade

Foreign Direct Investment

Regional Economic Integration

The Foreign Exchange Market

The International Monetary System

The Strategy of International Business

Entering Foreign Markets

Global Production and Supply Chain Management

Global Marketing and RD

Global Human Resource Management

Filters