Exam 19: Financing International Trade

Who bears the payment risk in a letter of credit

___________ refers to the purchase of financial obligations,such as bills of exchange or promissory notes,without recourse to the original holder,usually the exporter.

The ______________ is a self-sustaining federal agency responsible for insuring direct U.S.investments in foreign countries against the risk of currency inconvertibility,expropriation,and other political risks.

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

A _____________ letter of credit is not a trade-related letter of credit.

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

The Working Capital 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 100 percent of the loan's principal and interest.

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

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

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

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

A letter of credit does not guarantee that the goods purchased will be those invoiced and shipped.

The all-in-rate a bank charges its customer(s)for accepting drafts includes both the discount rate and the acceptance commission.

Which of the following is not a program of the ExportImport Bank of the U.S.

A __________ provides a summary of freight charges and conveys title to the merchandise.

The ____________________ is a private corporation owned by a consortium of commercial banks and industrial companies,but the ______________ is a self-sustaining government agency.

With _______,a bank purchases a receivable without recourse to the exporter.

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

From a bank's viewpoint,issuing a letter of credit is analogous to making a loan as far as risk is concerned.

An irrevocable L/C obligates the issuing bank to honor all drawings presented in conformity with the terms of the L/C. A) true. B) false.