Question 1

In FAS (free alongside ship, loading port) the buyer pays all the transportation and delivery expenses up to the ship's side and clears the goods for export. Risk passes at the ship's rail.

Accepted Answer

A) True 
 B)False  True

Question 2

The first step in finding a foreign market for a product is to determine whether a market exists for a firm's products.

Accepted Answer

A) True 
 B)False  True

Question 3

If a firm decides to set up its own export operation rather than do indirect exporting, the firm must obtain overseas distribution.

Accepted Answer

A) True 
 B)False  True

Question 4

CIF and CFR terms are more convenient for foreign buyers because they merely have to add the import duties, landing charges, and freight from the port of arrival to their warehouses to establish their cost.

Accepted Answer

A) True 
 B)False

Question 5

Incoterms were created by the New York Chamber of Commerce and are revised every year.

Accepted Answer

A) True 
 B)False

Question 6

Products placed in a bonded warehouse do not pay import duties until they are removed.

Accepted Answer

A) True 
 B)False

Question 7

Exporters should consider both private and public export financing.

Accepted Answer

A) True 
 B)False

Question 8

Reverse trade missions try to find import sources in foreign countries for U.S. producers.

Accepted Answer

A) True 
 B)False

Question 9

Mistakes in selecting foreign distributors and sales representatives are not an issue new exporters face.

Accepted Answer

A) True 
 B)False

Question 10

Sales forecasts and budgets, pricing policies, product characteristics, holiday schedules, and cash flow projections are all part of the export marketing plan.

Accepted Answer

A) True 
 B)False

Question 11

An export bill of lading serves as:

Accepted Answer

A)   a contract for carriage between the shipper and the carrier.
B)   a receipt from the carrier for the goods shipped.
C)   a certificate of ownership.
D)   a receipt for the IRS.
E)   A, B, and C.

Question 12

Every importer should know how the U.S. Customs calculates import duties and know the importance of the product classification.

Accepted Answer

A) True 
 B)False

Question 13

Export drafts must be paid before the buyer receives shipping documents.

Accepted Answer

A) True 
 B)False

Question 14

In the area of shipment risk, ocean vessels assume:

Accepted Answer

A)   all the risk for the safety of their cargo.
B)   none of the risk for the safety of their cargo, except for negligence.
C)   exporters or importers will have bought adequate insurance.
D)   marine environments are usually safe.
E)   half of the risk for the safety of their shipment.

Question 15

In CIF (cost, insurance, freight, foreign port) the buyer quotes a price that includes the cost of the goods, insurance, and all transportation and miscellaneous charges to the named foreign port in the country of final destination.

Accepted Answer

A) True 
 B)False

Question 16

Basic named perils marine insurance covers:

Accepted Answer

A)   perils of the sea, fires, jettisons, hurricanes.
B)   theft and larceny.
C)   piracy on the seas.
D)   accidents and storms other than hurricanes.
E)   flooding, tsunamis, earthquakes.

Question 17

"Comparing the total cost of ocean freight versus air freight, air freight may be cheaper." What components are considered when making the previous statement?

Accepted Answer

A)   Insurance rates
B)   Packing
C)   Replacement cost of damaged goods
D)   Inventory cost
E)   All of the above

Question 18

Once a firm determines that a market exists for its products, it needs to decide to export directly or indirectly.

Accepted Answer

A) True 
 B)False

Question 19

U.S. pavilions are located in every country around the world and provide background information and displays on foreign companies.

Accepted Answer

A) True 
 B)False

Question 20

On an open account, the buyer assumes all of the payment risk.

Accepted Answer

A) True 
 B)False

Exam 14: Export and Import Practices

In FAS (free alongside ship, loading port) the buyer pays all the transportation and delivery expenses up to the ship's side and clears the goods for export. Risk passes at the ship's rail.

The first step in finding a foreign market for a product is to determine whether a market exists for a firm's products.

If a firm decides to set up its own export operation rather than do indirect exporting, the firm must obtain overseas distribution.

CIF and CFR terms are more convenient for foreign buyers because they merely have to add the import duties, landing charges, and freight from the port of arrival to their warehouses to establish their cost.

Incoterms were created by the New York Chamber of Commerce and are revised every year.

Products placed in a bonded warehouse do not pay import duties until they are removed.

Exporters should consider both private and public export financing.

Reverse trade missions try to find import sources in foreign countries for U.S. producers.

Mistakes in selecting foreign distributors and sales representatives are not an issue new exporters face.

Sales forecasts and budgets, pricing policies, product characteristics, holiday schedules, and cash flow projections are all part of the export marketing plan.

An export bill of lading serves as:

Every importer should know how the U.S. Customs calculates import duties and know the importance of the product classification.

Export drafts must be paid before the buyer receives shipping documents.

In the area of shipment risk, ocean vessels assume:

In CIF (cost, insurance, freight, foreign port) the buyer quotes a price that includes the cost of the goods, insurance, and all transportation and miscellaneous charges to the named foreign port in the country of final destination.

Basic named perils marine insurance covers:

"Comparing the total cost of ocean freight versus air freight, air freight may be cheaper." What components are considered when making the previous statement?

Once a firm determines that a market exists for its products, it needs to decide to export directly or indirectly.

U.S. pavilions are located in every country around the world and provide background information and displays on foreign companies.

On an open account, the buyer assumes all of the payment risk.