Question 1

A straight bill of lading is most likely to be used under which of the following circumstances?

Accepted Answer

A) when the merchandise has not been paid for in advance 
B) when the transaction is being financed by a bank 
C) when the shipment is to an affiliate 
D) none of the above 
A) when the merchandise has not been paid for in advance 
B) when the transaction is being financed by a bank 
C) when the shipment is to an affiliate 
D) none of the above

Question 2

Explain what a letter of credit (L/C)is,who the principle parties are,what the principle advantage is,and how the L/C facilitates international trade.

Accepted Answer

A letter of credit (L/C)is a bank's cond

Question 3

A signed ________ is issued by the exporter and contains a precise description of the merchandise.

Accepted Answer

A) packing list 
B) bill of lading 
C) commercial invoice 
D) banker's acceptance 
A) packing list 
B) bill of lading 
C) commercial invoice 
D) banker's acceptance

Question 4

Which of the following purposes is NOT served by the bill of lading?

Accepted Answer

A) It acts as a receipt. 
B) It acts as a contract. 
C) It acts as a document of title. 
D) It acts as all of the above. 
A) It acts as a receipt. 
B) It acts as a contract. 
C) It acts as a document of title. 
D) It acts as all of the above.

Question 5

The letter of credit is designed to

Accepted Answer

A) allow the buyer to obtain title to the goods before they are received. 
B) free the seller from concerns over the payment abilities of the buyer. 
C) free the seller from any merchandise guarantees. 
D) be issued by the bank at the request of an exporter. 
A) allow the buyer to obtain title to the goods before they are received. 
B) free the seller from concerns over the payment abilities of the buyer. 
C) free the seller from any merchandise guarantees. 
D) be issued by the bank at the request of an exporter.

Question 6

When a confirmed letter of credit is used,the exporting firm gains because

Accepted Answer

A) the government in effect subsidizes shipping costs. 
B) the time involved in shipping is generally reduced. 
C) the firm can sell against the promise of a local bank rather than a firm. 
D) the exporting firm is considered of higher risk. 
A) the government in effect subsidizes shipping costs. 
B) the time involved in shipping is generally reduced. 
C) the firm can sell against the promise of a local bank rather than a firm. 
D) the exporting firm is considered of higher risk.

Question 7

A ________ is issued to the exporter by a common carrier transporting the merchandise.

Accepted Answer

A) commercial invoice 
B) banker's acceptance 
C) packing list 
D) bill of lading 
A) commercial invoice 
B) banker's acceptance 
C) packing list 
D) bill of lading

Question 8

In a typical forfaiting agreement the importer and exporter agree between themselves on a series of imports to be paid for over a period of time,typically three to five years.

Accepted Answer

A) True 
 B)False

Question 9

The person or company initiating the draft or bill of exchange is known as the ________.

Accepted Answer

A) maker. 
B) drawer. 
C) originator. 
D) any of the above. 
A) maker. 
B) drawer. 
C) originator. 
D) any of the above.

Question 10

Custom Granite Inc.has a Canadian receivables contract for $200,000 due in 270 days.The firm has been approached by a factoring firm that offers to purchase the receivables at a 12% per annum discount plus a 1% charge for a nonrecourse clause.What is the annualized percentage all-in-cost of this factoring alternative?

Accepted Answer

A) 14.82% 
B) 13.00% 
C) 12.00% 
D) 9.09% 
A) 14.82% 
B) 13.00% 
C) 12.00% 
D) 9.09%

Question 11

The exporter-importer relationship to a corporation of a foreign importer that has not previously conducted business with the firm would be an

Accepted Answer

A) unaffiliated known. 
B) affiliated party. 
C) unaffiliated unknown. 
D) any of the above. 
A) unaffiliated known. 
B) affiliated party. 
C) unaffiliated unknown. 
D) any of the above.

Question 12

The risk of default on the part of the importer is present as soon as

Accepted Answer

A) a price quote is requested. 
B) goods are shipped. 
C) the export contract is signed. 
D) goods are received. 
A) a price quote is requested. 
B) goods are shipped. 
C) the export contract is signed. 
D) goods are received.

Question 13

Because most international transactions are between affiliated parties,international transaction contracts are less complex,but the management of the total value of the MNE is more complex.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following documents is NOT part of a system designed to protect both the importer and exporter from non-completion of trade?

Accepted Answer

A) letter of credit 
B) draft 
C) bill of lading 
D) All of the above are important protective documents. 
A) letter of credit 
B) draft 
C) bill of lading 
D) All of the above are important protective documents.

Question 15

The ________ is the instrument normally used to actually effect payment in international commerce.

Accepted Answer

A) banker's acceptance 
B) bill of exchange 
C) bill of lading 
D) letter of credit 
A) banker's acceptance 
B) bill of exchange 
C) bill of lading 
D) letter of credit

Question 16

A bill of exchange or draft drawn on a bank and commonly used to guarantee exporters that they will receive payment on goods delivered to importers is a/an

Accepted Answer

A) banker's acceptance. 
B) clean draft. 
C) bill of lading. 
D) letter of credit. 
A) banker's acceptance. 
B) clean draft. 
C) bill of lading. 
D) letter of credit.

Question 17

A banker's acceptance is a ________ that has been accepted by a bank.

Accepted Answer

A) credit certificate 
B) time draft 
C) line of credit 
D) bill of lading 
A) credit certificate 
B) time draft 
C) line of credit 
D) bill of lading

Question 18

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 total Jackson Automotive can expect to receive if the firm takes payment today?

Accepted Answer

A) $993,000 
B) $995,000 
C) $988,000 
D) $996,000 
A) $993,000 
B) $995,000 
C) $988,000 
D) $996,000

Question 19

Polaris Corporation has made an agreement to ship goods to a foreign firm with whom they have not entered into a contract for three years.However,the firms have communicated regularly since the last sale three years ago.This is an example of an

Accepted Answer

A) unaffiliated known party transaction. 
B) unaffiliated unknown party transaction. 
C) affiliated party transaction. 
D) none of the above. 
A) unaffiliated known party transaction. 
B) unaffiliated unknown party transaction. 
C) affiliated party transaction. 
D) none of the above.

Question 20

Today,international trade is dominated by transactions between unaffiliated parties (known or unknown).

Accepted Answer

A) True 
 B)False

A straight bill of lading is most likely to be used under which of the following circumstances?

Explain what a letter of credit (L/C)is,who the principle parties are,what the principle advantage is,and how the L/C facilitates international trade.

A signed ________ is issued by the exporter and contains a precise description of the merchandise.

Which of the following purposes is NOT served by the bill of lading?

The letter of credit is designed to

When a confirmed letter of credit is used,the exporting firm gains because

A ________ is issued to the exporter by a common carrier transporting the merchandise.

In a typical forfaiting agreement the importer and exporter agree between themselves on a series of imports to be paid for over a period of time,typically three to five years.

The person or company initiating the draft or bill of exchange is known as the ________.

The exporter-importer relationship to a corporation of a foreign importer that has not previously conducted business with the firm would be an

The risk of default on the part of the importer is present as soon as

Because most international transactions are between affiliated parties,international transaction contracts are less complex,but the management of the total value of the MNE is more complex.

Which of the following documents is NOT part of a system designed to protect both the importer and exporter from non-completion of trade?

The ________ is the instrument normally used to actually effect payment in international commerce.

A bill of exchange or draft drawn on a bank and commonly used to guarantee exporters that they will receive payment on goods delivered to importers is a/an

A banker's acceptance is a ________ that has been accepted by a bank.

Polaris Corporation has made an agreement to ship goods to a foreign firm with whom they have not entered into a contract for three years.However,the firms have communicated regularly since the last sale three years ago.This is an example of an

Today,international trade is dominated by transactions between unaffiliated parties (known or unknown).

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 straight bill of lading is most likely to be used under which of the following circumstances?

Explain what a letter of credit (L/C)is,who the principle parties are,what the principle advantage is,and how the L/C facilitates international trade.

A signed ________ is issued by the exporter and contains a precise description of the merchandise.

Which of the following purposes is NOT served by the bill of lading?

The letter of credit is designed to

When a confirmed letter of credit is used,the exporting firm gains because

A ________ is issued to the exporter by a common carrier transporting the merchandise.

In a typical forfaiting agreement the importer and exporter agree between themselves on a series of imports to be paid for over a period of time,typically three to five years.

The person or company initiating the draft or bill of exchange is known as the ________.

The exporter-importer relationship to a corporation of a foreign importer that has not previously conducted business with the firm would be an

The risk of default on the part of the importer is present as soon as

Because most international transactions are between affiliated parties,international transaction contracts are less complex,but the management of the total value of the MNE is more complex.

Which of the following documents is NOT part of a system designed to protect both the importer and exporter from non-completion of trade?

The ________ is the instrument normally used to actually effect payment in international commerce.

A bill of exchange or draft drawn on a bank and commonly used to guarantee exporters that they will receive payment on goods delivered to importers is a/an

A banker's acceptance is a ________ that has been accepted by a bank.

Polaris Corporation has made an agreement to ship goods to a foreign firm with whom they have not entered into a contract for three years.However,the firms have communicated regularly since the last sale three years ago.This is an example of an

Today,international trade is dominated by transactions between unaffiliated parties (known or unknown).

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