Exam 19: Financing International Trade

A letter of credit does not guarantee that the products shipped will be those described in the documents.

The all-in rate charged on banker's acceptances is higher than the prime-based rate that a bank would charge a creditworthy borrower for a regular loan.

A bank issuing a letter of credit on behalf of an importer is obligated to make the payment due under the letter of credit regardless of the importer's willingness or ability to pay.

A bill of exchange serves as a receipt for shipment and a summary of freight charges; most importantly, it conveys title to the merchandise.

​The Direct Loan Program is administered by the:

Cross-border factoring involves a network of factors in various countries that assess importers' credit risk.

​____ is(are) not a type of program offered by the Ex-Im Bank.

Which of the following would be included in a commercial invoice?

If shipment is made under a time draft, the exporter is paid as soon as the products have been shipped and the draft is presented to the importer for payment.

The ____ is a private corporation owned by a consortium of commercial banks and industrial companies, but the ____ is a self-sustaining government agency formed in 1971.

An exchange of products between two parties under two distinct contracts expressed in monetary terms is:

Factoring involves the sale of accounts receivable to a third party, called a factor, for a discount.

Under a letter of credit, the exporter will not ship the products until the importer has sent payment to the exporter.

____ refers to medium-term financing in which financial obligations, such as bills of exchange or promissory notes, are purchased from the original holder, usually the exporter; the obligations are sold "without recourse," meaning that if the importer does not pay, the exporter has no responsibility for their payment.

In a(n) ____ or clearing-account arrangement, the delivery of products to the importer is compensated for by the exporter's buying back a certain amount of the product from the importer.

Which of the following would not be included in a bill of lading?

The exchange of products between two parties without the use of any currency as a medium of exchange is called factoring.

Which of the following is not true regarding a banker's acceptance?

Which of the following payment terms provides the exporter with the greatest degree of protection?

​Consider an exporter that ships products to an importer on credit. The exporter needs funds immediately, so it obtains a loan from a bank using the account receivable as collateral. This reflects: