Question 1

The draft is the instrument normally used in international commerce to

Accepted Answer

A) transfer product. 
B) prove ownership. 
C) transfer title. 
D) initiate the sale. 
A) transfer product. 
B) prove ownership. 
C) transfer title. 
D) initiate the sale.

Question 2

Use the information to answer the following question(s).
Jackson Automotive Inc. of California agrees to sell specialized automotive parts to Hidatsi of Korea. Because the two companies have never done business with each other, Jackson requires a banker's acceptance as payment for the $1,000,000 order. The banker's acceptance carries a 1.4% commission per annum and payment is to be received in 6 months. If Jackson Inc. chooses to discount or sell the bankers acceptance to its bank, the discount rate is 1.00% per annum.
-Refer to Instruction 19.1.What is the size of the discount (not including the commission fee)Jackson must take for receiving the proceeds of the sale today rather than waiting for six months?

Accepted Answer

A) $7,000 
B) $5,000 
C) $12,000 
D) $14.000 
A) $7,000 
B) $5,000 
C) $12,000 
D) $14.000

Question 3

Which are NOT types of letter of credit?

Accepted Answer

A) insurable vs. noninsurable 
B) confirmed vs. unconfirmed 
C) revocable vs. irrevocable 
D) None are letters of credit. 
A) insurable vs. noninsurable 
B) confirmed vs. unconfirmed 
C) revocable vs. irrevocable 
D) None are letters of credit.

Question 4

Define and describe the process of factoring.When might this process be attractive to firms?

Accepted Answer

Specialized firms,known as factors,purch

Question 5

The nature of the relationship between the exporter and the importer is critical to understanding the methods for import-export financing utilized in industry.Provide an overview of the three categories of relationships: unaffiliated unknown,unaffiliated known,and affiliated.

Accepted Answer

A foreign importer with which a firm has

Question 6

Which of the following is NOT true regarding a letter of credit?

Accepted Answer

A) The importer and exporter agree on a transaction. 
B) The importer applies to its local bank for the issuance of a letter of credit. 
C) The exporter applies to its local bank for the issuance of a letter of credit. 
D) The importer's bank cuts a sales contract based on its assessment of the creditworthiness of the importer. 
A) The importer and exporter agree on a transaction. 
B) The importer applies to its local bank for the issuance of a letter of credit. 
C) The exporter applies to its local bank for the issuance of a letter of credit. 
D) The importer's bank cuts a sales contract based on its assessment of the creditworthiness of the importer.

Question 7

Which of the following is NOT a factor in the discounting of a securitized export receivable?

Accepted Answer

A) The cost of credit insurance. 
B) The historic collection risk of the importer. 
C) The historic collection risk of the exporter. 
D) The size of the financing and service fees. 
A) The cost of credit insurance. 
B) The historic collection risk of the importer. 
C) The historic collection risk of the exporter. 
D) The size of the financing and service fees.

Question 8

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,current rates on banker's acceptances are 6%,and the bank charges a commission of 1% per annum,how much will the exporter receive if he sells the acceptance in the secondary market six months prior to maturity?

Accepted Answer

A) $250,000 
B) $244,000 
C) $242,500 
D) $241,250 
A) $250,000 
B) $244,000 
C) $242,500 
D) $241,250

Question 9

Use the information to answer the following question(s).
Jackson Automotive Inc. of California agrees to sell specialized automotive parts to Hidatsi of Korea. Because the two companies have never done business with each other, Jackson requires a banker's acceptance as payment for the $1,000,000 order. The banker's acceptance carries a 1.4% commission per annum and payment is to be received in 6 months. If Jackson Inc. chooses to discount or sell the bankers acceptance to its bank, the discount rate is 1.00% per annum.
-Refer to Instruction 19.1.What is the size of the commission Jackson Automotive will pay the bank for the banker's acceptance?

Accepted Answer

A) $7,000 
B) $5,000 
C) $12,000 
D) $14,000 
A) $7,000 
B) $5,000 
C) $12,000 
D) $14,000

Question 10

What is a banker's acceptance? How are they initiated? Why are they desirable for the exporter?

Accepted Answer

A draft,or bill of exchange,is a written

Question 11

In the United States,the Foreign Credit Insurance Corporation

Accepted Answer

A) is a subsidiary of the Export-Import Bank. 
B) provides letters of credit for U.S. importers. 
C) provides letters of credit for U.S. exporters. 
D) provides policies that protect U.S. exporters against default by foreign importers. 
A) is a subsidiary of the Export-Import Bank. 
B) provides letters of credit for U.S. importers. 
C) provides letters of credit for U.S. exporters. 
D) provides policies that protect U.S. exporters against default by foreign importers.

Question 12

In a letter of credit,the bank substitutes its credit for that of the importer and promises to pay if certain documents are submitted to the bank.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following relationships between importing and exporting parties would require the least detailed contract to conduct business?

Accepted Answer

A) affiliated party 
B) unaffiliated unknown party 
C) known unaffiliated party 
D) domestic supplier 
A) affiliated party 
B) unaffiliated unknown party 
C) known unaffiliated party 
D) domestic supplier

Question 14

Most drafts in international trade are "clean."

Accepted Answer

A) True 
 B)False

Question 15

The Export-Import Bank is an independent agency of the U.S.government established in 1934 to

Accepted Answer

A) ship money abroad. 
B) import agricultural products during the recession. 
C) facilitate and stimulate foreign trade of the United States. 
D) none of the above. 
A) ship money abroad. 
B) import agricultural products during the recession. 
C) facilitate and stimulate foreign trade of the United States. 
D) none of the above.

Question 16

What is the Import-Export Bank and how can it aid in export financing?

Accepted Answer

The Export-Import Bank (also called Exim

Question 17

A fundamental problem of international trade is

Accepted Answer

A) authorities in the importing country may disallow the consular invoice. 
B) authorities in the exporting country may refuse to issue a consular invoice. 
C) buyer and seller may act in collusion. 
D) buyer and seller may not completely trust each other. 
A) authorities in the importing country may disallow the consular invoice. 
B) authorities in the exporting country may refuse to issue a consular invoice. 
C) buyer and seller may act in collusion. 
D) buyer and seller may not completely trust each other.

Question 18

The major advantage to the exporter of a letter of credit is that the exporter does not receive any funds until the documents have arrived at a local port or airfield.

Accepted Answer

A) True 
 B)False

Question 19

Use the information to answer the following question(s).
Jackson Automotive Inc. of California agrees to sell specialized automotive parts to Hidatsi of Korea. Because the two companies have never done business with each other, Jackson requires a banker's acceptance as payment for the $1,000,000 order. The banker's acceptance carries a 1.4% commission per annum and payment is to be received in 6 months. If Jackson Inc. chooses to discount or sell the bankers acceptance to its bank, the discount rate is 1.00% per annum.
-Refer to Instruction 19.1.________ is an unsecured promissory note.

Accepted Answer

A) A banker's acceptance 
B) An overdraft 
C) A securitized loan 
D) Commercial paper 
A) A banker's acceptance 
B) An overdraft 
C) A securitized loan 
D) Commercial paper

Question 20

The person or company to whom the draft or bill of exchange is addressed is the ________.

Accepted Answer

A) drawee. 
B) drawer. 
C) maker. 
D) originator. 
A) drawee. 
B) drawer. 
C) maker. 
D) originator.

The draft is the instrument normally used in international commerce to

Which are NOT types of letter of credit?

Define and describe the process of factoring.When might this process be attractive to firms?

The nature of the relationship between the exporter and the importer is critical to understanding the methods for import-export financing utilized in industry.Provide an overview of the three categories of relationships: unaffiliated unknown,unaffiliated known,and affiliated.

Which of the following is NOT true regarding a letter of credit?

Which of the following is NOT a factor in the discounting of a securitized export receivable?

What is a banker's acceptance? How are they initiated? Why are they desirable for the exporter?

In the United States,the Foreign Credit Insurance Corporation

In a letter of credit,the bank substitutes its credit for that of the importer and promises to pay if certain documents are submitted to the bank.

Which of the following relationships between importing and exporting parties would require the least detailed contract to conduct business?

Most drafts in international trade are "clean."

The Export-Import Bank is an independent agency of the U.S.government established in 1934 to

What is the Import-Export Bank and how can it aid in export financing?

A fundamental problem of international trade is

The major advantage to the exporter of a letter of credit is that the exporter does not receive any funds until the documents have arrived at a local port or airfield.

The person or company to whom the draft or bill of exchange is addressed is the ________.

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

The draft is the instrument normally used in international commerce to

Which are NOT types of letter of credit?

Define and describe the process of factoring.When might this process be attractive to firms?

The nature of the relationship between the exporter and the importer is critical to understanding the methods for import-export financing utilized in industry.Provide an overview of the three categories of relationships: unaffiliated unknown,unaffiliated known,and affiliated.

Which of the following is NOT true regarding a letter of credit?

Which of the following is NOT a factor in the discounting of a securitized export receivable?

What is a banker's acceptance? How are they initiated? Why are they desirable for the exporter?

In the United States,the Foreign Credit Insurance Corporation

In a letter of credit,the bank substitutes its credit for that of the importer and promises to pay if certain documents are submitted to the bank.

Which of the following relationships between importing and exporting parties would require the least detailed contract to conduct business?

Most drafts in international trade are "clean."

The Export-Import Bank is an independent agency of the U.S.government established in 1934 to

What is the Import-Export Bank and how can it aid in export financing?

A fundamental problem of international trade is

The major advantage to the exporter of a letter of credit is that the exporter does not receive any funds until the documents have arrived at a local port or airfield.

The person or company to whom the draft or bill of exchange is addressed is the ________.

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