Exam 19: Financing International Trade

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.

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

With ____, the exporter ships the products to the importer while still retaining actual title to the merchandise; the importer does not have to pay for the products until they have been sold to a third party.

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

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

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

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

The ____ was established in 1934 with the intention to facilitate Soviet-American trade.

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.

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

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

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.

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 letters of credit?

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

There is an active secondary market for banker's acceptances.

Which of the following would not be included in a bill of lading? a.the names of the exporter and importer b.the terms of payment c.the date of shipment d.All of the above would be included in a bill of lading.

Under a countertrade arrangement, the exporter ships the products to the importer while retaining title to the merchandise until it is sold.

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.

An importer always has the option to cancel an irrevocable letter of credit.