Question 1

Why is barter not a common arrangement?

Accepted Answer

A) It is a very complex arrangement. 
B) It is primarily used with trading partners who are generally considered creditworthy. 
C) Firms run the risk of having to accept goods they do not want. 
D) When the goods are exchanged simultaneously,one partner ends up financing the other.

Question 2

The two categories of drafts are:

Accepted Answer

A) contract drafts and lending drafts. 
B) single-party drafts and multi-party drafts. 
C) title drafts and quantity drafts. 
D) sight drafts and time drafts.

Question 3

In the event of the lack of a letter of credit,export credit insurance can protect the exporter against the possibility of importer's default on payment.

Accepted Answer

A) True 
 B)False

Question 4

The letter of credit reduces the importer's ability to borrow funds for other purposes.

Accepted Answer

A) True 
 B)False

Question 5

Why does a letter of credit reduce an importer's ability to borrow funds?

Accepted Answer

A) The importer has to pay fees to the bank for the letter of credit. 
B) It is a financial liability against the importer. 
C) The importer has to pay for the merchandise immediately. 
D) The importer has to pay for unsatisfactory products.

Question 6

3M has built its export success on all of the following principles EXCEPT:

Accepted Answer

A) adding additional product lines once exporting operations are successful. 
B) getting into a market first and then learning about the country. 
C) hiring locals to promote the firm's products. 
D) entering on a small scale to reduce risks.

Question 7

When a letter of credit is used in exporting arrangements

Accepted Answer

A) no cash deposit or collateral is required from the importer. 
B) the exporter pays the bank a fee for the service. 
C) the letter of credit becomes a financial contract between the bank and the exporter. 
D) the importer directly pays the exporter upon delivery of goods.

Question 8

The text suggests that exporting is not an end in itself,but merely a step toward:

Accepted Answer

A) self-sufficiency in domestic markets. 
B) foreign production. 
C) market saturation. 
D) product standardization.

Question 9

According to the Small Business Administration,exporters still account for only a tiny percentage of U.S.firms-less than 5 percent of firms with fewer than 500 employees

Accepted Answer

A) True 
 B)False

Question 10

A company of export specialists that acts as an export marketing department for client firms is called a(n):

Accepted Answer

A) export management company. 
B) export-import firm. 
C) foreign direct investment management firm. 
D) strategy-management company.

Question 11

Unfortunately due to higher default risks,commercial banks and major accounting firms are less willing to assist small firms in starting export operations than they were a decade ago.

Accepted Answer

A) True 
 B)False

Question 12

In international trade,the supplier (exporter)of a good wants to be paid before he ships his consignment.Correspondingly,the buyer (importer)wants to make payment only upon the receipt of the good.These varying,often conflicting,preferences of parties to a trade are a manifestation of:

Accepted Answer

A) corporate greed. 
B) acculturation. 
C) their lack of trust. 
D) an absence of commitment.

Question 13

Which of the following stands at the center of international commercial transactions?

Accepted Answer

A) Bill of lading 
B) Time draft 
C) Letter of credit 
D) Sight draft

Question 14

What is the advantage of export credit insurance?

Accepted Answer

A) A third party will pay a specified sum of money to a beneficiary,normally the exporter,on presentation of particular,specified documents. 
B) It will cover losses due to the buyer's insolvency or payment default. 
C) It will put the importer in a strong bargaining position. 
D) It will provide financing aid that will facilitate exports.

Question 15

What are sogo shosha? How do sogo shosha help Japanese exporters? What role do they play in countertrade?

Accepted Answer

The answer of What are sogo shosha? How do sogo...

Question 16

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,it is called:

Accepted Answer

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

Question 17

Briefly 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 Briefly describe the role of the U.S.Department...

Question 18

A U.S.firm sells some products to China.China pays the U.S.firm in dollars,but in exchange,the U.S.firm agrees to spend some of its proceeds from the sale on textiles produced by China.Which type of countertrade is this?

Accepted Answer

A) Switch trading 
B) Buyback 
C) Counterpurchase 
D) Barter

Question 19

What is the main attraction of countertrade?

Accepted Answer

A) Firms can avoid setting up in-house trading departments. 
B) It addresses the issue of lack of trust in international business. 
C) A firm can finance an export deal when other means are not available. 
D) Firms usually do not prefer to be paid in hard currency.

Question 20

Which type of countertrade is the simplest arrangement of the kind,although not common?

Accepted Answer

A) Switch trading 
B) Counterpurchase 
C) Barter 
D) Offset

Exam 13: Exporting,Importing,and Countertrade

Why is barter not a common arrangement?

The two categories of drafts are:

In the event of the lack of a letter of credit,export credit insurance can protect the exporter against the possibility of importer's default on payment.

The letter of credit reduces the importer's ability to borrow funds for other purposes.

Why does a letter of credit reduce an importer's ability to borrow funds?

3M has built its export success on all of the following principles EXCEPT:

When a letter of credit is used in exporting arrangements

The text suggests that exporting is not an end in itself,but merely a step toward:

According to the Small Business Administration,exporters still account for only a tiny percentage of U.S.firms-less than 5 percent of firms with fewer than 500 employees

A company of export specialists that acts as an export marketing department for client firms is called a(n) :

Unfortunately due to higher default risks,commercial banks and major accounting firms are less willing to assist small firms in starting export operations than they were a decade ago.

In international trade,the supplier (exporter) of a good wants to be paid before he ships his consignment.Correspondingly,the buyer (importer) wants to make payment only upon the receipt of the good.These varying,often conflicting,preferences of parties to a trade are a manifestation of:

Which of the following stands at the center of international commercial transactions?

What is the advantage of export credit insurance?

What are sogo shosha? How do sogo shosha help Japanese exporters? What role do they play in countertrade?

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,it is called:

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

A U.S.firm sells some products to China.China pays the U.S.firm in dollars,but in exchange,the U.S.firm agrees to spend some of its proceeds from the sale on textiles produced by China.Which type of countertrade is this?

What is the main attraction of countertrade?

Which type of countertrade is the simplest arrangement of the kind,although not common?