Question 1

Offset refers to the use of a specialized third-party trading house in a countertrade arrangement.

Accepted Answer

A) True 
 B)False

Question 2

Commercial banks and major accounting firms are rarely willing to assist small firms in starting export operations due to high default risks.

Accepted Answer

A) True 
 B)False

Question 3

The mission of the Foreign Credit Insurance Association is to provide financing aid that will facilitate exports, imports, and the exchange of commodities between the United States and other countries.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is a function of an export management company?

Accepted Answer

A) It starts exporting operations for a firm with the understanding that the firm will take over operations after they are well established. 
B) It coordinates the Export Legal Assistance Network, a nationwide group of international trade attorneys. 
C) It oversees volunteers with international trade experience to provide one-on-one counseling to active and new-to-export businesses. 
D) It collects duties on exported products and sets interest rates for charging foreign investors. 
E) It gives novice exporters the names and addresses of potential distributors in foreign markets along with businesses they are in.

Question 5

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. This type of countertrade is called a(n):

Accepted Answer

A) counterpurchase. 
B) offset. 
C) switch trade. 
D) buyback. 
E) barter.

Question 6

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.

Question 7

Which of the following is true with respect to the international and domestic practices of settling trade transactions?

Accepted Answer

A) In an international transaction, a formal promise to pay is required before the buyer can obtain the merchandise. 
B) In an international transaction, the seller usually ships merchandise on an open account. 
C) In a domestic transaction, a draft is used to settle trade transactions. 
D) In an international transaction, the exporter sends a commercial invoice that specifies the amount due and the terms of payment to the importer. 
E) In an international transaction, there is more trust between the exporter and the importer than in a domestic transaction.

Question 8

Briefly describe the different types of countertrade arrangements.

Accepted Answer

The answer of Briefly describe the different types of countertrade...

Question 9

Which of the following is a strategic step taken to increase a firm's probability of exporting successfully?

Accepted Answer

A) Avoiding the use of export management companies to contain costs 
B) Entering several markets simultaneously to hedge risk 
C) Entering a foreign market on a small scale 
D) Waiting for export opportunities 
E) Avoiding recruitment of local personnel

Question 10

An export credit insurance is necessary when the exporter:

Accepted Answer

A) is exposed to the risk that the 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 barterlike agreement.

Question 11

When a time draft is drawn on and accepted by a business firm, it is known as a(n):

Accepted Answer

A) trade acceptance. 
B) in-transit bill. 
C) banker's acceptance. 
D) bill of lading. 
E) letter of credit.

Question 12

A drawback of countertrade is that:

Accepted Answer

A) it fails to enable firms to finance an export deal. 
B) it is detrimental to the economy of the importing country. 
C) developing nations have trouble raising the foreign exchange necessary to pay for imports. 
D) it does not allow firms to invest in an in-house trading department dedicated to arranging and managing deals. 
E) it may involve the exchange of poor-quality goods that cannot be disposed of profitably.

Question 13

Countertrade occurs when the:

Accepted Answer

A) exporter may not be paid in his or her home currency due to nonconvertibility. 
B) exporter can convert the currency only in U.S. dollars. 
C) exporter is dealing with a country that has huge foreign reserves. 
D) exporter has easy access to export credit to fund its international trade. 
E) importer defaults on payment.

Question 14

TruWorth Petroleum negotiated a deal with a foreign country in which TruWorth would build several ammonia plants in the foreign country and receive ammonia as partial payment over a 20-year period. This is an example of:

Accepted Answer

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

Question 15

Which of the following is a distinct type of countertrade arrangement?

Accepted Answer

A) Merger 
B) Arbitrage 
C) Dirty float 
D) Barter 
E) Deregulation

Question 16

The bank that has a direct lending operation under which it lends dollars to foreign borrowers for use in purchasing U.S. exports is called the:

Accepted Answer

A) Department of Commerce. 
B) World Bank. 
C) Ex-Im Bank. 
D) Bank of New York. 
E) Small Business Administration.

Question 17

Which of the following is a drawback of a countertrade agreement?

Accepted Answer

A) It fails to give firms a way to finance an export deal. 
B) It requires an in-house trading department to be maintained, which can be expensive and time-consuming. 
C) It is detrimental to the economy of the importing country. 
D) Developing nations may have trouble raising the foreign exchange necessary to pay for imports. 
E) It is not an acceptable means of trading in most developing countries.

Question 18

Which of the following is issued to an exporter by a common carrier transporting the merchandise and serves as a receipt, a contract, and a document of title?

Accepted Answer

A) Bill of lading 
B) Collateral 
C) Draft 
D) Letter of credit 
E) Bill of exchange

Question 19

Issued by a bank at the request of an importer, a bill of lading states that the bank will pay a specified sum of money to a beneficiary, normally the exporter, on presentation of particular, specified documents.

Accepted Answer

A) True 
 B)False

Question 20

Describe the role of the U.S. Department of Commerce in helping U.S. firms increase their knowledge of export opportunities.

Accepted Answer

The answer of Describe the role of the U.S. Department...

Exam 14: Exporting, Importing, and Countertrade

Offset refers to the use of a specialized third-party trading house in a countertrade arrangement.

Commercial banks and major accounting firms are rarely willing to assist small firms in starting export operations due to high default risks.

The mission of the Foreign Credit Insurance Association is to provide financing aid that will facilitate exports, imports, and the exchange of commodities between the United States and other countries.

Which of the following is a function of an export management company?

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. This type of countertrade is called a(n) :

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

Which of the following is true with respect to the international and domestic practices of settling trade transactions?

Briefly describe the different types of countertrade arrangements.

Which of the following is a strategic step taken to increase a firm's probability of exporting successfully?

An export credit insurance is necessary when the exporter:

When a time draft is drawn on and accepted by a business firm, it is known as a(n) :

A drawback of countertrade is that:

Countertrade occurs when the:

TruWorth Petroleum negotiated a deal with a foreign country in which TruWorth would build several ammonia plants in the foreign country and receive ammonia as partial payment over a 20-year period. This is an example of:

Which of the following is a distinct type of countertrade arrangement?

The bank that has a direct lending operation under which it lends dollars to foreign borrowers for use in purchasing U.S. exports is called the:

Which of the following is a drawback of a countertrade agreement?

Which of the following is issued to an exporter by a common carrier transporting the merchandise and serves as a receipt, a contract, and a document of title?

Issued by a bank at the request of an importer, a bill of lading states that the bank will pay a specified sum of money to a beneficiary, normally the exporter, on presentation of particular, specified documents.

Describe the role of the U.S. Department of Commerce in helping U.S. firms increase their knowledge of export opportunities.