Question 1

The party to a draft who signs and sends the draft to the second party is called the

Accepted Answer

A)  drawer 
B)  payee 
C)  drawee 
D)  broker 
A)  drawer 
B)  payee 
C)  drawee 
D)  broker A

Question 2

Which of the following is NOT an advantage to the exporter of L/C financing?

Accepted Answer

A)  an L/C eliminates credit risk if the bank that opens it is of undoubted standing 
B)  an L/C reduces the danger that payment will be delayed or withheld due to exchange controls or other political acts 
C)  payment is only in compliance with the L/C's stipulated conditions 
D)  an L/C guards against pre-shipment risks 
A)  an L/C eliminates credit risk if the bank that opens it is of undoubted standing 
B)  an L/C reduces the danger that payment will be delayed or withheld due to exchange controls or other political acts 
C)  payment is only in compliance with the L/C's stipulated conditions 
D)  an L/C guards against pre-shipment risks C

Question 3

Which of the following firms would find a factor most useful?

Accepted Answer

A)  Levi Strauss, which has been shipping jeans to the same customers in 120 countries for over 40 years, 
B)  Brown and Root, which manages major construction projects around the world 
C)  RC Cola, which periodically ships a small order of soft drinks overseas 
D)  IBM, which exports mainframes and other expensive equipment to customers in over 100 countries around the world 
A)  Levi Strauss, which has been shipping jeans to the same customers in 120 countries for over 40 years, 
B)  Brown and Root, which manages major construction projects around the world 
C)  RC Cola, which periodically ships a small order of soft drinks overseas 
D)  IBM, which exports mainframes and other expensive equipment to customers in over 100 countries around the world C

Question 4

Which one of the following is NOT true when shipping goods under documentary time drafts for acceptance?

Accepted Answer

A)  the exporter is extending credit to the importer 
B)  the exporter is relinquishing control of the goods in return for a signature on the acceptance to assure it of payment 
C)  the importer is no longer bound to pay the draft to the exporter 
D)  a bill of lading will be the most important document of the transaction 
A)  the exporter is extending credit to the importer 
B)  the exporter is relinquishing control of the goods in return for a signature on the acceptance to assure it of payment 
C)  the importer is no longer bound to pay the draft to the exporter 
D)  a bill of lading will be the most important document of the transaction

Question 5

Which one of the following is NOT a true economic rationale for countertrade?

Accepted Answer

A)  many Third World countries use countertrade to conserve what little foreign exchange they have 
B)  the goods taken in countertrade are usually the least difficult to market 
C)  countertrade enables members of cartels such as OPEC to undercut an agreed?upon price without formally doing so 
D)  the trade may circumvent tariffs 
A)  many Third World countries use countertrade to conserve what little foreign exchange they have 
B)  the goods taken in countertrade are usually the least difficult to market 
C)  countertrade enables members of cartels such as OPEC to undercut an agreed?upon price without formally doing so 
D)  the trade may circumvent tariffs

Question 6

Which of the following does NOT accompany a documentary draft?

Accepted Answer

A)  bill of lading in negotiable form 
B)  commercial invoice 
C)  insurance certificate 
D)  consular invoice 
A)  bill of lading in negotiable form 
B)  commercial invoice 
C)  insurance certificate 
D)  consular invoice

Question 7

An exporter shipping goods to a nation that may impose currency controls will seek an L/C that is

Accepted Answer

A)  revocable 
B)  clean 
C)  documentary 
D)  confirmed by a domestic bank 
A)  revocable 
B)  clean 
C)  documentary 
D)  confirmed by a domestic bank

Question 8

Which one of the following is an advantage to open account financing?

Accepted Answer

A)  high risk 
B)  seller must finance production 
C)  increased risk from currency controls 
D)  no customer resistance 
A)  high risk 
B)  seller must finance production 
C)  increased risk from currency controls 
D)  no customer resistance

Question 9

Most L/Cs issued in connection with global trade transactions are

Accepted Answer

A)  documentary 
B)  clean 
C)  revocable 
D)  created by a combination of a buyer and a seller alone 
A)  documentary 
B)  clean 
C)  revocable 
D)  created by a combination of a buyer and a seller alone

Question 10

Which of the following payment methods provides both parties with a strong measure of protection against commercial and political risks?

Accepted Answer

A)  Cash in advance 
B)  Letter of credit 
C)  Draft 
D)  Consignment 
A)  Cash in advance 
B)  Letter of credit 
C)  Draft 
D)  Consignment

Question 11

The only U.S. agency dedicated solely to financing and facilitating U.S. exports is the

Accepted Answer

A)  Eximbank 
B)  Foreign Credit Insurance Association 
C)  Bankers' Association for Foreign Trade 
D)  Agency for International Development 
A)  Eximbank 
B)  Foreign Credit Insurance Association 
C)  Bankers' Association for Foreign Trade 
D)  Agency for International Development

Question 12

An exporter manufacturing a specialized piece of equipment can hedge the risk that its customer will cancel the contract before shipment by obtaining a

Accepted Answer

A)  consignment contract 
B)  open account 
C)  bill of lading 
D)  letter of credit 
A)  consignment contract 
B)  open account 
C)  bill of lading 
D)  letter of credit

Question 13

Which one of the following countries has the reputation for the greatest length of time for companies to collect on the average bill?

Accepted Answer

A)  Iran 
B)  India 
C)  Taiwan 
D)  Germany 
A)  Iran 
B)  India 
C)  Taiwan 
D)  Germany

Question 14

Which of the following is NOT an advantage to the importer of L/C financing?

Accepted Answer

A)  any documents required are carefully inspected by clerks with years of experience 
B)  an L/C is about as good as cash in advance 
C)  the importer using an L/C can usually command better credit terms and/or prices 
D)  L/C financing may be cheaper than the alternatives 
E)  all of the above are advantages of the L/C to the importer 
A)  any documents required are carefully inspected by clerks with years of experience 
B)  an L/C is about as good as cash in advance 
C)  the importer using an L/C can usually command better credit terms and/or prices 
D)  L/C financing may be cheaper than the alternatives 
E)  all of the above are advantages of the L/C to the importer

Question 15

When factoring is done on a nonrecourse basis, the _______ has title to the receivables and the _______ is responsible for credit checking and collecting the receivables.

Accepted Answer

A)  factor, factor 
B)  factor, borrowing firm 
C)  borrowing firm, factor 
D)  borrowing firm, borrowing firm 
A)  factor, factor 
B)  factor, borrowing firm 
C)  borrowing firm, factor 
D)  borrowing firm, borrowing firm

Question 16

Which of the following functions does a draft NOT perform?

Accepted Answer

A)  to provide written evidence, in clear and simple terms, of a financial obligation 
B)  to enable both parties to potentially reduce their costs of financing 
C)  to provide a negotiable and unconditional instrument 
D)  to offer the exporter greater safeguards than a letter of credit in securing repayment from the importer 
A)  to provide written evidence, in clear and simple terms, of a financial obligation 
B)  to enable both parties to potentially reduce their costs of financing 
C)  to provide a negotiable and unconditional instrument 
D)  to offer the exporter greater safeguards than a letter of credit in securing repayment from the importer

Question 17

Suppose the Fluor Corporation is seeking to bid on a construction project in Turkey. Which Eximbank program will be most useful to Fluor?

Accepted Answer

A)  "standby" loan commitment 
B)  Eximbank payment guarantee 
C)  preliminary commitment 
D)  Eximbank loan guarantee 
A)  "standby" loan commitment 
B)  Eximbank payment guarantee 
C)  preliminary commitment 
D)  Eximbank loan guarantee

Question 18

Countertrade transactions will most probably take the form of

Accepted Answer

A)  barter or buyback 
B)  credit card purchases 
C)  cash in advance 
D)  open account terms 
A)  barter or buyback 
B)  credit card purchases 
C)  cash in advance 
D)  open account terms

Question 19

Why is Eximbank financing often referred to as financing of "last resort?"

Accepted Answer

A)  it will not provide financing unless the U.S. exporter is doing business in more than one country 
B)  it will not provide financing unless private capital is unavailable 
C)  fees are extremely high for guarantees and insurance 
D)  the Eximbank authorizes loans for only the worst credit risks 
A)  it will not provide financing unless the U.S. exporter is doing business in more than one country 
B)  it will not provide financing unless private capital is unavailable 
C)  fees are extremely high for guarantees and insurance 
D)  the Eximbank authorizes loans for only the worst credit risks

Question 20

Caterpillar Tractor sells heavy construction equipment to a Polish firm. In return, the Polish firm issues a promissory note to Caterpillar promising to pay for the equipment over a five-year period. Caterpillar sells the note to Deutsche Bank at a discount. Caterpillar has used

Accepted Answer

A)  accounts receivable financing 
B)  factoring 
C)  forfaiting 
D)  letter of credit 
A)  accounts receivable financing 
B)  factoring 
C)  forfaiting 
D)  letter of credit

The party to a draft who signs and sends the draft to the second party is called the

Which of the following is NOT an advantage to the exporter of L/C financing?

Which of the following firms would find a factor most useful?

Which one of the following is NOT true when shipping goods under documentary time drafts for acceptance?

Which one of the following is NOT a true economic rationale for countertrade?

Which of the following does NOT accompany a documentary draft?

An exporter shipping goods to a nation that may impose currency controls will seek an L/C that is

Which one of the following is an advantage to open account financing?

Most L/Cs issued in connection with global trade transactions are

Which of the following payment methods provides both parties with a strong measure of protection against commercial and political risks?

The only U.S. agency dedicated solely to financing and facilitating U.S. exports is the

An exporter manufacturing a specialized piece of equipment can hedge the risk that its customer will cancel the contract before shipment by obtaining a

Which one of the following countries has the reputation for the greatest length of time for companies to collect on the average bill?

Which of the following is NOT an advantage to the importer of L/C financing?

When factoring is done on a nonrecourse basis, the _ has title to the receivables and the _ is responsible for credit checking and collecting the receivables.

Which of the following functions does a draft NOT perform?

Suppose the Fluor Corporation is seeking to bid on a construction project in Turkey. Which Eximbank program will be most useful to Fluor?

Countertrade transactions will most probably take the form of

Why is Eximbank financing often referred to as financing of "last resort?"

Caterpillar Tractor sells heavy construction equipment to a Polish firm. In return, the Polish firm issues a promissory note to Caterpillar promising to pay for the equipment over a five-year period. Caterpillar sells the note to Deutsche Bank at a discount. Caterpillar has used

Introduction: Multinational Enterpriseand Multinational Financial Management

The Determination of Exchange Rates

The International Monetary System

Parity Conditions in International Finance and Currency Forecasting

The Balance of Payments and International Economic Linkages

Country Risk Anaylsis

The Foreign Exchange Markets

Currency Futures and Options Markets

Swaps and Interest Rate Derivatives

Measuring and Managing Translation and Transaction Exposure

Measuring and Managing Economic Exposure

International Financing and National Capital Market

The Euromarkets

The Cost of Capital for Foreign Investment

International Portfolio Investment

Corporate Strategy and Foreign Direct Investment

Capital Budgeting for the Multinational Corporation

Current Asset Management and Short Team Financing

Managing the Multinational Financial System

Filters

Exam 18: Financing Foreign Trade

The party to a draft who signs and sends the draft to the second party is called the

Which of the following is NOT an advantage to the exporter of L/C financing?

Which of the following firms would find a factor most useful?

Which one of the following is NOT true when shipping goods under documentary time drafts for acceptance?

Which one of the following is NOT a true economic rationale for countertrade?

Which of the following does NOT accompany a documentary draft?

An exporter shipping goods to a nation that may impose currency controls will seek an L/C that is

Which one of the following is an advantage to open account financing?

Most L/Cs issued in connection with global trade transactions are

Which of the following payment methods provides both parties with a strong measure of protection against commercial and political risks?

The only U.S. agency dedicated solely to financing and facilitating U.S. exports is the

An exporter manufacturing a specialized piece of equipment can hedge the risk that its customer will cancel the contract before shipment by obtaining a

Which one of the following countries has the reputation for the greatest length of time for companies to collect on the average bill?

Which of the following is NOT an advantage to the importer of L/C financing?

When factoring is done on a nonrecourse basis, the _______ has title to the receivables and the _______ is responsible for credit checking and collecting the receivables.

Which of the following functions does a draft NOT perform?

Suppose the Fluor Corporation is seeking to bid on a construction project in Turkey. Which Eximbank program will be most useful to Fluor?

Countertrade transactions will most probably take the form of

Why is Eximbank financing often referred to as financing of "last resort?"

Caterpillar Tractor sells heavy construction equipment to a Polish firm. In return, the Polish firm issues a promissory note to Caterpillar promising to pay for the equipment over a five-year period. Caterpillar sells the note to Deutsche Bank at a discount. Caterpillar has used

Introduction: Multinational Enterpriseand Multinational Financial Management

The Determination of Exchange Rates

The International Monetary System

Parity Conditions in International Finance and Currency Forecasting

The Balance of Payments and International Economic Linkages

Country Risk Anaylsis

The Foreign Exchange Markets

Currency Futures and Options Markets

Swaps and Interest Rate Derivatives

Measuring and Managing Translation and Transaction Exposure

Measuring and Managing Economic Exposure

International Financing and National Capital Market

The Euromarkets

The Cost of Capital for Foreign Investment

International Portfolio Investment

Corporate Strategy and Foreign Direct Investment

Capital Budgeting for the Multinational Corporation

Current Asset Management and Short Team Financing

Managing the Multinational Financial System

Filters

When factoring is done on a nonrecourse basis, the _ has title to the receivables and the _ is responsible for credit checking and collecting the receivables.