Question 1

A domestic importer ordering foreign merchandise from a specific supplier would probably obtain

Accepted Answer

A)  a brokers' acceptance. 
B)  a traveler's letter of credit. 
C)  a commercial letter of credit. 
D)  travelers' checks. 
A)  a brokers' acceptance. 
B)  a traveler's letter of credit. 
C)  a commercial letter of credit. 
D)  travelers' checks.

Question 2

The Export-Import Bank is a corporation owned by the Federal Reserve Banks.

Accepted Answer

A) True 
 B)False

Question 3

In mid-1944, authorities from all major nations met in Bretton Woods, New Hampshire, to formulate a post-World War II international monetary system.

Accepted Answer

A) True 
 B)False

Question 4

The commercial letter of credit is of special usefulness in international transactions when the

Accepted Answer

A)  importer's credit rating is either weak or not well known. 
B)  exporter's credit rating is weak, but the importer's credit reputation is strong. 
C)  bank financing the importer's transaction has very little confidence in the customer's ability to meet payments. 
D)  exporter's bank has little confidence in its customer's ability to meet its financial obligations. 
A)  importer's credit rating is either weak or not well known. 
B)  exporter's credit rating is weak, but the importer's credit reputation is strong. 
C)  bank financing the importer's transaction has very little confidence in the customer's ability to meet payments. 
D)  exporter's bank has little confidence in its customer's ability to meet its financial obligations.

Question 5

Foreign exchange markets are the same thing as as currency exchange markets.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following statements is false?

Accepted Answer

A)  Foreign banks, in addition to having correspondent relation with United States banks, are permitted to set up subsidiaries in this country. 
B)  The trust receipt is used by a bank in releasing shipping documents to a customer when the bank wishes to retain title to the merchandise. 
C)  A nation with relatively lower interest rate levels will have a relatively stronger currency. 
D)  A nation with a relatively lower inflation rate will have a relatively stronger currency. 
A)  Foreign banks, in addition to having correspondent relation with United States banks, are permitted to set up subsidiaries in this country. 
B)  The trust receipt is used by a bank in releasing shipping documents to a customer when the bank wishes to retain title to the merchandise. 
C)  A nation with relatively lower interest rate levels will have a relatively stronger currency. 
D)  A nation with a relatively lower inflation rate will have a relatively stronger currency.

Question 7

Before arbitragers take action with respect to exchange rate differentials

Accepted Answer

A)  central bank approval must be obtained. 
B)  loans to cover transactions must be obtained. 
C)  a market differential of at least 1¢ must exist between two currencies. 
D)  a differential of as little as 1/16 of 1¢ may trigger action. 
A)  central bank approval must be obtained. 
B)  loans to cover transactions must be obtained. 
C)  a market differential of at least 1¢ must exist between two currencies. 
D)  a differential of as little as 1/16 of 1¢ may trigger action.

Question 8

A traveler's letter of credit is issued by a bank in one country and addressed to a list of foreign banks which are usually correspondents of the issuing bank and have agreed to purchase sight drafts presented to them by persons with appropriate letters of credit.

Accepted Answer

A) True 
 B)False

Question 9

Political risk is the risk associated with possible slow or negative economic growth, as well as with the likelihood of variability.

Accepted Answer

A) True 
 B)False

Question 10

An importer will generally try to avoid making payment for a purchase before the goods are actually shipped by

Accepted Answer

A)  purchasing a letter of credit. 
B)  having payment sent to a bank in the exporter's country to be held until proper shipment is made. 
C)  post-dating a check. 
D)  insisting on payment only upon delivery. 
A)  purchasing a letter of credit. 
B)  having payment sent to a bank in the exporter's country to be held until proper shipment is made. 
C)  post-dating a check. 
D)  insisting on payment only upon delivery.

Question 11

A draft and a bill of exchange are the same thing.

Accepted Answer

A) True 
 B)False

Question 12

Traveler's letters of credit are

Accepted Answer

A)  issued by a bank and addressed to a list of banks in other countries. 
B)  especially popular with tourists. 
C)  convertible into cash at most large banks. 
D)  of special value to exporters. 
A)  issued by a bank and addressed to a list of banks in other countries. 
B)  especially popular with tourists. 
C)  convertible into cash at most large banks. 
D)  of special value to exporters.

Question 13

The World Bank is also called the International Bank for Reconstruction and Development.

Accepted Answer

A) True 
 B)False

Question 14

The exchange value of the U.S. dollar relative to other currencies does not impact international trade balances.

Accepted Answer

A) True 
 B)False

Question 15

In the field of foreign trade, the most common form of credit instrument is the

Accepted Answer

A)  bankers' acceptance. 
B)  trust receipt. 
C)  sight draft. 
D)  travelers letter of credit. 
A)  bankers' acceptance. 
B)  trust receipt. 
C)  sight draft. 
D)  travelers letter of credit.

Question 16

A statement by a bank guaranteeing acceptance and payment of a draft up to a stated amount is called a(n)

Accepted Answer

A)  bill of exchange. 
B)  commercial letter of credit. 
C)  time draft. 
D)  documentary draft. 
A)  bill of exchange. 
B)  commercial letter of credit. 
C)  time draft. 
D)  documentary draft.

Question 17

The ___________________ shows the flow of income into and out of the United States during a specified period.

Accepted Answer

A)  balance of payments 
B)  capital account balance 
C)  current account balance 
D)  merchandise trade balance 
A)  balance of payments 
B)  capital account balance 
C)  current account balance 
D)  merchandise trade balance

Question 18

Key factors that influence currency exchange rates include all of the following except

Accepted Answer

A)  supply and demand relationships. 
B)  legal constraints. 
C)  interest rates. 
D)  inflation rates. 
A)  supply and demand relationships. 
B)  legal constraints. 
C)  interest rates. 
D)  inflation rates.

Question 19

Under conditions of purchasing power parity (PPP), a country with a relatively _______ expected inflation rate will have its currency _______ relative to a country with a relatively _______ inflation rate.

Accepted Answer

A)  higher, depreciate, lower 
B)  lower, depreciate, higher 
C)  higher, appreciate, lower 
D)  lower, appreciate, higher. 
A)  higher, depreciate, lower 
B)  lower, depreciate, higher 
C)  higher, appreciate, lower 
D)  lower, appreciate, higher.

Question 20

Which of the following statements is most correct?

Accepted Answer

A)  A weaker dollar results in less imports of foreign merchandise since it requires fewer dollars for purchase. 
B)  A stronger dollar results in fewer imports of foreign merchandise since it requires fewer dollars for purchase. 
C)  A stronger dollar results in more imports of foreign merchandise since it requires more dollars for purchase. 
D)  A weaker dollar results in more imports of foreign merchandise since it requires more dollars for purchase. 
A)  A weaker dollar results in less imports of foreign merchandise since it requires fewer dollars for purchase. 
B)  A stronger dollar results in fewer imports of foreign merchandise since it requires fewer dollars for purchase. 
C)  A stronger dollar results in more imports of foreign merchandise since it requires more dollars for purchase. 
D)  A weaker dollar results in more imports of foreign merchandise since it requires more dollars for purchase.

A domestic importer ordering foreign merchandise from a specific supplier would probably obtain

The Export-Import Bank is a corporation owned by the Federal Reserve Banks.

In mid-1944, authorities from all major nations met in Bretton Woods, New Hampshire, to formulate a post-World War II international monetary system.

The commercial letter of credit is of special usefulness in international transactions when the

Foreign exchange markets are the same thing as as currency exchange markets.

Which of the following statements is false?

Before arbitragers take action with respect to exchange rate differentials

A traveler's letter of credit is issued by a bank in one country and addressed to a list of foreign banks which are usually correspondents of the issuing bank and have agreed to purchase sight drafts presented to them by persons with appropriate letters of credit.

Political risk is the risk associated with possible slow or negative economic growth, as well as with the likelihood of variability.

An importer will generally try to avoid making payment for a purchase before the goods are actually shipped by

A draft and a bill of exchange are the same thing.

Traveler's letters of credit are

The World Bank is also called the International Bank for Reconstruction and Development.

The exchange value of the U.S. dollar relative to other currencies does not impact international trade balances.

In the field of foreign trade, the most common form of credit instrument is the

A statement by a bank guaranteeing acceptance and payment of a draft up to a stated amount is called a(n)

The ___________________ shows the flow of income into and out of the United States during a specified period.

Key factors that influence currency exchange rates include all of the following except

Under conditions of purchasing power parity (PPP), a country with a relatively ___ expected inflation rate will have its currency _ relative to a country with a relatively _____ inflation rate.

Which of the following statements is most correct?

The Financial Environment

Money and the Monetary System

Banks and Other Financial Institutions

Federal Reserve System

Policy Makers and the Money Supply

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuations

Securities and Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters

Exam 6: International Finance and Trade

A domestic importer ordering foreign merchandise from a specific supplier would probably obtain

The Export-Import Bank is a corporation owned by the Federal Reserve Banks.

In mid-1944, authorities from all major nations met in Bretton Woods, New Hampshire, to formulate a post-World War II international monetary system.

The commercial letter of credit is of special usefulness in international transactions when the

Foreign exchange markets are the same thing as as currency exchange markets.

Which of the following statements is false?

Before arbitragers take action with respect to exchange rate differentials

A traveler's letter of credit is issued by a bank in one country and addressed to a list of foreign banks which are usually correspondents of the issuing bank and have agreed to purchase sight drafts presented to them by persons with appropriate letters of credit.

Political risk is the risk associated with possible slow or negative economic growth, as well as with the likelihood of variability.

An importer will generally try to avoid making payment for a purchase before the goods are actually shipped by

A draft and a bill of exchange are the same thing.

Traveler's letters of credit are

The World Bank is also called the International Bank for Reconstruction and Development.

The exchange value of the U.S. dollar relative to other currencies does not impact international trade balances.

In the field of foreign trade, the most common form of credit instrument is the

A statement by a bank guaranteeing acceptance and payment of a draft up to a stated amount is called a(n)

The ___________________ shows the flow of income into and out of the United States during a specified period.

Key factors that influence currency exchange rates include all of the following except

Under conditions of purchasing power parity (PPP), a country with a relatively _______ expected inflation rate will have its currency _______ relative to a country with a relatively _______ inflation rate.

Which of the following statements is most correct?

The Financial Environment

Money and the Monetary System

Banks and Other Financial Institutions

Federal Reserve System

Policy Makers and the Money Supply

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuations

Securities and Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters

Under conditions of purchasing power parity (PPP), a country with a relatively ___ expected inflation rate will have its currency _ relative to a country with a relatively _____ inflation rate.