Exam 19: Financing International Trade

If shipment is made under a forfaiting draft, the exporter is paid once shipment has been made and the draft is presented to the importer for payment.

All types of foreign trade transactions in which the sale of products to one country is linked to the purchase or exchange of products from that same country are called countertrade.

In an open account transaction, the exporter ships the products to the importer but retains title to the products until they have been sold.

​When products are shipped under a ______, the importer that accepts the draft is promising to pay the exporter at a specified future date.

The Working Capital Loan Guarantee Program of the Private Export Funding Corporation (PEFCO) encourages commercial banks to extend short-term export financing to eligible exporters by providing a comprehensive guarantee that covers 90 percent of the loan's principal and interest.

The commission that a bank charges for a banker's acceptance is referred to as the all-in rate; it is the only cost involved in an acceptance.

Which of the following is a reason why commercial banks may facilitate international trade?

​MNCs can use ____ to sell their existing accounts receivable as a means of obtaining cash.

​A ____ provides a summary of freight charges and conveys title to the merchandise in an international shipment.

In factoring, a bank provides an exporter with a loan that is secured by the exporter's accounts receivable.

Syndicates of banks may be involved in forfaiting transactions because these transactions are usually in excess of $500,000.

​Consider an importer that issues a promissory note to an exporter to pay for imported capital goods over a period of five years. The exporter sells the note at a discount to a bank. This reflects:

​Consider an exporter that sells its accounts receivables to another firm that becomes responsible for obtaining payment from the various importers. This reflects:

The term "counterpurchase" denotes the exchange of products between two parties under two distinct contracts expressed in monetary terms.

​The time period of most time drafts ranges from

In a countertrade transaction, banks on both ends act as intermediaries in the processing of shipping documents and the collection of payment.

When products are shipped under a ______, the exporter is paid once the shipment is made and the draft is presented to the importer for payment.

Most of the programs of the Export-Import Bank of the United States are designed to encourage private lenders to finance export trade by assuming some of the credit risk and providing financing to foreign importers when private lenders are unwilling to do so.

The Working Capital Loan Guarantee Program is administered by the:

​According to the text, international trade activity has generally ____ over time. This should cause the popularity of trade finance techniques to ____ over time.