Exam 16: Exporting, Importing, and Countertrade

Describe the process involved in financing imports and exports using a letter of credit. Why has this system developed? What is the advantage of using this system?

A sight draft allows for a delay in payment.

A draft is simply an order written by an exporter instructing an importer to pay a specified amount of money at a specified time.

Proactive firms do not consider exporting until their domestic market is saturated.

In ________, one party agrees to purchase goods and services with a specified percentage of the proceeds from the original sale, and this party can fulfill the obligation with any firm in the country to which the sale is being made.

________ is an alternative means of structuring an international sale when conventional means of payment are difficult, costly, or nonexistent.

What is true of reactive firms?

Which of the following is a disadvantage of using a letter of credit (L/C)?

Countertrade denotes a whole range of barter-like agreements that involve trading goods and services when they cannot be traded for money.

The great promise of exporting is that

Which of the following is a major advantage of using a letter of credit?

Which of the following statements is true of export credit insurance?

In theory, the advantage of export management companies is that they are

A ________ is issued to the exporter by the common carrier transporting the merchandise.

What is a common difficulty that traders face when exporting goods or services to other countries?

Time drafts cannot be sold to investors at a discount from face value.

Compare and contrast counterpurchase agreements and offset arrangements. Why might an exporter prefer an offset to a counterpurchase deal?

Nearly every state in the United States maintains active trade commissions to promote exports.

________ occurs when a firm builds a plant in a country and agrees to take a certain percentage of the plant's output as partial payment for the contract.

An export packer can advise companies who are unfamiliar with exporting on appropriate design and materials for the packaging of their items.