Question 1

A letter of credit that is confirmed in the ________ country has the additional advantage of eliminating the problem of ________.

Accepted Answer

A) exporter's; portfolio risk 
B) importer's; blocked foreign exchange 
C) exporter's; blocked foreign exchange 
D) none of the above 
A) exporter's; portfolio risk 
B) importer's; blocked foreign exchange 
C) exporter's; blocked foreign exchange 
D) none of the above C

Question 2

________ is a French term meaning to forfeit or surrender a right.

Accepted Answer

A) Parfait 
B) Forfait 
C) Mon Dieu 
D) Je ne sais pas 
A) Parfait 
B) Forfait 
C) Mon Dieu 
D) Je ne sais pas B

Question 3

A/An ________ letter of credit is an obligation only of the issuing bank whereas other banks honor a/an ________ letter of credit.

Accepted Answer

A) irrevocable; unconfirmed 
B) revocable; confirmed 
C) confirmed; irrevocable 
D) unconfirmed; confirmed 
A) irrevocable; unconfirmed 
B) revocable; confirmed 
C) confirmed; irrevocable 
D) unconfirmed; confirmed D

Question 4

The essence of forfaiting is the non-recourse sale by an exporter of bank-guaranteed promissory notes,bills of exchange,or similar documents received from an importer in another country.

Accepted Answer

A) True 
 B)False

Question 5

An exporter who insists on cash or a letter of credit for foreign shipments is likely to lose orders to competitors from other countries that provide more favorable credit terms.

Accepted Answer

A) True 
 B)False

Question 6

________ is the risk that interest rates will change between signing the contract and payment for goods and services.

Accepted Answer

A) Currency risk 
B) Risk of non-completion 
C) Default risk 
D) Portfolio risk 
A) Currency risk 
B) Risk of non-completion 
C) Default risk 
D) Portfolio risk

Question 7

A letter of credit is an agreement by the bank to pay against documents rather than the actual merchandise.

Accepted Answer

A) True 
 B)False

Question 8

The Foreign Credit Insurance Association is a branch of the U.S.federal government.

Accepted Answer

A) True 
 B)False

Question 9

The three parties to a letter of credit are

Accepted Answer

A) issuing bank, seller, and applicant. 
B) importer, exporter, and shipping company. 
C) notary public, importer, and importer's bank. 
D) Ex-Im bank, commercial bank, and importer. 
A) issuing bank, seller, and applicant. 
B) importer, exporter, and shipping company. 
C) notary public, importer, and importer's bank. 
D) Ex-Im bank, commercial bank, and importer.

Question 10

________ drafts are unaccompanied by any other documents,and are usually used between MNEs and ________.

Accepted Answer

A) Clean; new trading partners 
B) Documentary; their own affiliates 
C) Clean; their own affiliates 
D) None of the above 
A) Clean; new trading partners 
B) Documentary; their own affiliates 
C) Clean; their own affiliates 
D) None of the above

Question 11

A/An ________ letter of credit is intended to serve as a means of arranging payment,but not as a guarantee of payment.

Accepted Answer

A) irrevocable 
B) revocable 
C) confirmed 
D) unconfirmed 
A) irrevocable 
B) revocable 
C) confirmed 
D) unconfirmed

Question 12

Forfaiting is a complicated process.The author describes the procedure through a seven part process.Please describe the forfaiting process.

Accepted Answer

Step 1: Agreement.Importer and exporter

Question 13

An exporter has just received a banker's acceptance created by an international transaction.If the banker's acceptance has a face value of $250,000 and the bank charges a commission of 1% per annum,how much will the exporter receive from the banker if the acceptance is held until maturity six months from today?

Accepted Answer

A) $250,000 
B) $247,500 
C) $248,750 
D) $1,250 
A) $250,000 
B) $247,500 
C) $248,750 
D) $1,250

Question 14

Drafts that have been accepted by banks become

Accepted Answer

A) clean drafts. 
B) nonmarketable. 
C) banker's acceptances. 
D) none of the above. 
A) clean drafts. 
B) nonmarketable. 
C) banker's acceptances. 
D) none of the above.

Question 15

A sight draft is payable on presentation to the drawee; a time draft allows a delay in payment.

Accepted Answer

A) True 
 B)False

Question 16

The primary advantage of a letter of credit is that it reduces risk.

Accepted Answer

A) True 
 B)False

Question 17

________ may be required so that the contents of containers can be identified,either for customs purposes or for importer identification of the contents of separate containers.

Accepted Answer

A) Banker's acceptances 
B) Commercial invoices 
C) Consular invoices 
D) Packing lists 
A) Banker's acceptances 
B) Commercial invoices 
C) Consular invoices 
D) Packing lists

Question 18

Which of the following is NOT a requirement for a draft to become a negotiable instrument?

Accepted Answer

A) It must be payable to order or to bearer. 
B) It must be payable on demand or at a fixed or determinable future date. 
C) It must be in writing and signed by the maker or drawer. 
D) All of the above. 
A) It must be payable to order or to bearer. 
B) It must be payable on demand or at a fixed or determinable future date. 
C) It must be in writing and signed by the maker or drawer. 
D) All of the above.

Question 19

What is the trade dilemma and how is the dilemma generally solved?

Accepted Answer

International trade must work around a f

Question 20

An instrument issued by a bank,at the request of an importer,in which the bank promises to pay a beneficiary upon presentation of specified documents is a

Accepted Answer

A) time certificate of deposit. 
B) time draft. 
C) sight draft. 
D) letter of credit. 
A) time certificate of deposit. 
B) time draft. 
C) sight draft. 
D) letter of credit.

A letter of credit that is confirmed in the country has the additional advantage of eliminating the problem of .

________ is a French term meaning to forfeit or surrender a right.

A/An letter of credit is an obligation only of the issuing bank whereas other banks honor a/an letter of credit.

The essence of forfaiting is the non-recourse sale by an exporter of bank-guaranteed promissory notes,bills of exchange,or similar documents received from an importer in another country.

An exporter who insists on cash or a letter of credit for foreign shipments is likely to lose orders to competitors from other countries that provide more favorable credit terms.

________ is the risk that interest rates will change between signing the contract and payment for goods and services.

A letter of credit is an agreement by the bank to pay against documents rather than the actual merchandise.

The Foreign Credit Insurance Association is a branch of the U.S.federal government.

The three parties to a letter of credit are

drafts are unaccompanied by any other documents,and are usually used between MNEs and .

A/An ________ letter of credit is intended to serve as a means of arranging payment,but not as a guarantee of payment.

Forfaiting is a complicated process.The author describes the procedure through a seven part process.Please describe the forfaiting process.

Drafts that have been accepted by banks become

A sight draft is payable on presentation to the drawee; a time draft allows a delay in payment.

The primary advantage of a letter of credit is that it reduces risk.

________ may be required so that the contents of containers can be identified,either for customs purposes or for importer identification of the contents of separate containers.

Which of the following is NOT a requirement for a draft to become a negotiable instrument?

What is the trade dilemma and how is the dilemma generally solved?

An instrument issued by a bank,at the request of an importer,in which the bank promises to pay a beneficiary upon presentation of specified documents is a

Current Multinational Challenges and the Global Economy

Financial Goals and Corporate Governance

The International Monetary System

The Balance of Payments

Current Multinational Financial Challenges: the Credit Crisis of 2007 - 2009

The Foreign Exchange Market

International Parity Conditions

Foreign Currency Derivatives and Swaps

Foreign Exchange Rate Determination and Forecasting

Transaction and Translation Exposure

Operating Exposure

The Global Cost and Availability of Capital

Sourcing Equity and Debt Globally

Multinational Tax Management

Foreign Direct Investment and Political Risk

Multinational Capital Budgeting and Cross-Border Acquisitions

International Portfolio Theory and Diversification

Working Capital Management

Filters

Exam 19: International Trade Finance

A letter of credit that is confirmed in the ________ country has the additional advantage of eliminating the problem of ________.

________ is a French term meaning to forfeit or surrender a right.

A/An ________ letter of credit is an obligation only of the issuing bank whereas other banks honor a/an ________ letter of credit.

The essence of forfaiting is the non-recourse sale by an exporter of bank-guaranteed promissory notes,bills of exchange,or similar documents received from an importer in another country.

An exporter who insists on cash or a letter of credit for foreign shipments is likely to lose orders to competitors from other countries that provide more favorable credit terms.

________ is the risk that interest rates will change between signing the contract and payment for goods and services.

A letter of credit is an agreement by the bank to pay against documents rather than the actual merchandise.

The Foreign Credit Insurance Association is a branch of the U.S.federal government.

The three parties to a letter of credit are

________ drafts are unaccompanied by any other documents,and are usually used between MNEs and ________.

A/An ________ letter of credit is intended to serve as a means of arranging payment,but not as a guarantee of payment.

Forfaiting is a complicated process.The author describes the procedure through a seven part process.Please describe the forfaiting process.

Drafts that have been accepted by banks become

A sight draft is payable on presentation to the drawee; a time draft allows a delay in payment.

The primary advantage of a letter of credit is that it reduces risk.

________ may be required so that the contents of containers can be identified,either for customs purposes or for importer identification of the contents of separate containers.

Which of the following is NOT a requirement for a draft to become a negotiable instrument?

What is the trade dilemma and how is the dilemma generally solved?

An instrument issued by a bank,at the request of an importer,in which the bank promises to pay a beneficiary upon presentation of specified documents is a

Current Multinational Challenges and the Global Economy

Financial Goals and Corporate Governance

The International Monetary System

The Balance of Payments

Current Multinational Financial Challenges: the Credit Crisis of 2007 - 2009

The Foreign Exchange Market

International Parity Conditions

Foreign Currency Derivatives and Swaps

Foreign Exchange Rate Determination and Forecasting

Transaction and Translation Exposure

Operating Exposure

The Global Cost and Availability of Capital

Sourcing Equity and Debt Globally

Multinational Tax Management

Foreign Direct Investment and Political Risk

Multinational Capital Budgeting and Cross-Border Acquisitions

International Portfolio Theory and Diversification

Working Capital Management

Filters

A letter of credit that is confirmed in the country has the additional advantage of eliminating the problem of .

A/An letter of credit is an obligation only of the issuing bank whereas other banks honor a/an letter of credit.

drafts are unaccompanied by any other documents,and are usually used between MNEs and .