Exam 18: International Financial Management

________ are considered less risky and are usually discounted less than ________.

How does a time draft become a banker's acceptance?

Discuss the various forms of countertrade.

Why do financial officers at international firms adjust their capital budgeting techniques? Where can financial officers obtain low-cost sources of capital?

A sogo shosha might assist in the sale of Mitsubishi trucks in Ghana, taking payment in cocoa, which then can be sold to keiretsu-linked food processors back in Japan or to independent candy makers anywhere. This is an example of ________.

After issuing the letter of credit, the importer's bank sends it and the accompanying documents to the exporter's bank, which advises the exporter of the terms of the instrument, thereby creating a(n) ________.

________ occurs when exchange rate movements that occur after the firm is legally obligated to complete the transaction can affect the financial benefits and costs of an international transaction.

Which form of countertrade is used when each party simultaneously swaps its products for the products of the other?

What is economic exposure?

When acceptances are sold ________, it means that the buyer of the acceptance is stuck with the loss if the importer does not pay.

Economic exposure is the impact on the value of a firm's operations of unanticipated exchange rate changes.

What are the two roles of the bill of lading?

Ford Motor Company is considering a cash investment in a joint venture with Hyundai in South Korea. Ford considers the number of years it will take the firm to recover the original cash investment from the project's earnings, which is called the ________.

What are the primary issues associated with financing international trade? How does foreign exchange risk affect financing decisions?

What are the three corporate financial goals involved in managing working capital?

What is the simplest form of countertrade?

Counterpurchase is sometimes called parallel barter.

Which form of countertrade involves compensation arrangements whereby one firm sells capital goods to a second firm and is compensated in the form of output generated as a result of their use?

International banks participate in the swap market by acting as broker or by undertaking half of a swap for its own account.

The ________ is the number of years it will take the firm to recover the original cash investment from the project's earnings.