Question 1

A domestic importer ordering foreign merchandise from a specific supplier would probably obtain from a Bank A:

Accepted Answer

A) a bankers' acceptance 
B) a traveler's letter of credit 
C) a commercial letter of credit 
D) travelers' checks 
A) a bankers' acceptance 
B) a traveler's letter of credit 
C) a commercial letter of credit 
D) travelers' checks

Question 2

The exchange rate is the rate at which a given unit of foreign currency is quoted in terms of:

Accepted Answer

A) commodity prices 
B) barrels of oil 
C) the foreign currency 
D) gold 
E) none of the above 
A) commodity prices 
B) barrels of oil 
C) the foreign currency 
D) gold 
E) none of the above

Question 3

The ultimate effect of large-scale arbitrage activities on exchange rates is the elimination of the variation between the two markets.

Accepted Answer

A) True 
 B)False

Question 4

The balance of payments is a summary of all economic transactions between one country and the rest of the world.

Accepted Answer

A) True 
 B)False

Question 5

A draft that is not accompanied by any special documents and generally used when the exporter has confidence in the importer's ability to meet the draft when presented is known as:

Accepted Answer

A) an order bill of lading 
B) a clean draft 
C) a documentary sight draft 
D) none of the above 
A) an order bill of lading 
B) a clean draft 
C) a documentary sight draft 
D) none of the above

Question 6

A sight draft is one that is not accompanied by any special documents and is generally used when the exporter has confidence in the importer's ability to meet the draft when presented.

Accepted Answer

A) True 
 B)False

Question 7

The Federal Reserve System:

Accepted Answer

A) permits member banks to accept drafts,but restricts the time period involved 
B) actively encourages member banks to assist in financing international transactions 
C) discourages its member banks from accepting foreign drafts 
D) limits the type of international transactions for which member banks may accept drafts 
A) permits member banks to accept drafts,but restricts the time period involved 
B) actively encourages member banks to assist in financing international transactions 
C) discourages its member banks from accepting foreign drafts 
D) limits the type of international transactions for which member banks may accept drafts

Question 8

The commercial letter of credit is of special usefulness in international transactions when the:

Accepted Answer

A) importer's credit rating is either weak or not well known 
B) exporter's credit rating is weak,but the importer's credit reputation is strong 
C) bank financing the importer's transaction has very little confidence in the customer's ability to meet payments 
D) exporter's bank has little confidence in its customer's ability to meet its financial obligations 
A) importer's credit rating is either weak or not well known 
B) exporter's credit rating is weak,but the importer's credit reputation is strong 
C) bank financing the importer's transaction has very little confidence in the customer's ability to meet payments 
D) exporter's bank has little confidence in its customer's ability to meet its financial obligations

Question 9

Which of the following statements is false?

Accepted Answer

A) Foreign banks,in addition to having correspondent relation with United States banks,are permitted to set up subsidiaries in this country. 
B) The trust receipt is used by a bank in releasing shipping documents to a customer when the bank wishes to retain title to the merchandise. 
C) A nation with relatively lower interest rate levels will have a relatively stronger currency. 
D) A nation with a relatively lower inflation rate will have a relatively stronger currency. 
A) Foreign banks,in addition to having correspondent relation with United States banks,are permitted to set up subsidiaries in this country. 
B) The trust receipt is used by a bank in releasing shipping documents to a customer when the bank wishes to retain title to the merchandise. 
C) A nation with relatively lower interest rate levels will have a relatively stronger currency. 
D) A nation with a relatively lower inflation rate will have a relatively stronger currency.

Question 10

A traveler's letter of credit is issued by a bank in one country and addressed to a list of foreign banks which are usually correspondents of the issuing bank and have agreed to purchase sight drafts presented to them by persons with appropriate letters of credit.

Accepted Answer

A) True 
 B)False

Question 11

Key factors that influence currency exchange rates include all of the following EXCEPT:

Accepted Answer

A) supply and demand relationships 
B) legal constraints 
C) interest rates 
D) inflation rates 
A) supply and demand relationships 
B) legal constraints 
C) interest rates 
D) inflation rates

Question 12

Which of the following statements is most correct?

Accepted Answer

A) A weaker dollar results in more imports of foreign merchandise since it requires fewer dollars for purchase. 
B) A stronger dollar results in fewer imports of foreign merchandise since it requires fewer dollars for purchase. 
C) A stronger dollar results in more imports of foreign merchandise since it requires fewer dollars for purchase. 
D) A weaker dollar results in more imports of foreign merchandise since it requires more dollars for purchase. 
E) none of the above 
A) A weaker dollar results in more imports of foreign merchandise since it requires fewer dollars for purchase. 
B) A stronger dollar results in fewer imports of foreign merchandise since it requires fewer dollars for purchase. 
C) A stronger dollar results in more imports of foreign merchandise since it requires fewer dollars for purchase. 
D) A weaker dollar results in more imports of foreign merchandise since it requires more dollars for purchase. 
E) none of the above

Question 13

The international monetary system consists of institutions and mechanisms that foster oversees the World Bank,sets international trade policy,and determines the exchange rate regime for all participating countries.

Accepted Answer

A) True 
 B)False

Question 14

The order bill of lading represents the written acceptance of goods for shipment by a transportation company and the terms under which the goods are to be transported to their destination.

Accepted Answer

A) True 
 B)False

Question 15

Balances in foreign accounts are maintained for purposes of dealing in foreign exchange by:

Accepted Answer

A) central banks 
B) correspondents of domestic banks 
C) correspondents or foreign branches of domestic banks 
D) most multinational corporations 
E) none of the above 
A) central banks 
B) correspondents of domestic banks 
C) correspondents or foreign branches of domestic banks 
D) most multinational corporations 
E) none of the above

Question 16

The price that an individual must pay when purchasing claims to foreign exchange:

Accepted Answer

A) is always higher than the basic quotation rate 
B) is readily available in financial publications 
C) is relatively constant from day to day 
D) varies widely among sources of foreign exchange 
A) is always higher than the basic quotation rate 
B) is readily available in financial publications 
C) is relatively constant from day to day 
D) varies widely among sources of foreign exchange

Question 17

If balances in foreign accounts are substantially reduced due to an excess of demand relative to supply:

Accepted Answer

A) loans are usually sought from central banks and other institutions to replenish balances 
B) price quotations are adjusted to affect a reduction in demand and an increase in supply 
C) currency may be shipped abroad for deposit in such accounts 
D) Export-Import Bank loans are sought to bolster balances 
A) loans are usually sought from central banks and other institutions to replenish balances 
B) price quotations are adjusted to affect a reduction in demand and an increase in supply 
C) currency may be shipped abroad for deposit in such accounts 
D) Export-Import Bank loans are sought to bolster balances

Question 18

The international monetary system consists of institutions and mechanisms that foster international trade,manage the flow of financial capital,and determine currency exchange rates.

Accepted Answer

A) True 
 B)False

Question 19

The Federal Reserve System:

Accepted Answer

A) permits member banks to accept drafts,but restricts the time period involved 
B) actively encourages member banks to assist in financing international transactions 
C) discourages its member banks from accepting foreign drafts 
D) limits the type of international transactions for which member banks may accept drafts 
E) all of the above 
A) permits member banks to accept drafts,but restricts the time period involved 
B) actively encourages member banks to assist in financing international transactions 
C) discourages its member banks from accepting foreign drafts 
D) limits the type of international transactions for which member banks may accept drafts 
E) all of the above

Question 20

In the field of foreign trade,the most common form of credit instrument is the:

Accepted Answer

A) commercial loan 
B) trust receipt 
C) sight draft 
D) time draft 
E) none of the above 
A) commercial loan 
B) trust receipt 
C) sight draft 
D) time draft 
E) none of the above

A domestic importer ordering foreign merchandise from a specific supplier would probably obtain from a Bank A:

The exchange rate is the rate at which a given unit of foreign currency is quoted in terms of:

The ultimate effect of large-scale arbitrage activities on exchange rates is the elimination of the variation between the two markets.

The balance of payments is a summary of all economic transactions between one country and the rest of the world.

A draft that is not accompanied by any special documents and generally used when the exporter has confidence in the importer's ability to meet the draft when presented is known as:

A sight draft is one that is not accompanied by any special documents and is generally used when the exporter has confidence in the importer's ability to meet the draft when presented.

The Federal Reserve System:

The commercial letter of credit is of special usefulness in international transactions when the:

Which of the following statements is false?

A traveler's letter of credit is issued by a bank in one country and addressed to a list of foreign banks which are usually correspondents of the issuing bank and have agreed to purchase sight drafts presented to them by persons with appropriate letters of credit.

Key factors that influence currency exchange rates include all of the following EXCEPT:

Which of the following statements is most correct?

The international monetary system consists of institutions and mechanisms that foster oversees the World Bank,sets international trade policy,and determines the exchange rate regime for all participating countries.

The order bill of lading represents the written acceptance of goods for shipment by a transportation company and the terms under which the goods are to be transported to their destination.

Balances in foreign accounts are maintained for purposes of dealing in foreign exchange by:

The price that an individual must pay when purchasing claims to foreign exchange:

If balances in foreign accounts are substantially reduced due to an excess of demand relative to supply:

The international monetary system consists of institutions and mechanisms that foster international trade,manage the flow of financial capital,and determine currency exchange rates.

The Federal Reserve System:

In the field of foreign trade,the most common form of credit instrument is the:

The Financial Environment

Money and the Monetary System

Banks and Other Financial Institutions

Federal Reserve System

Policy Makers and the Money Supply

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuation

Securities Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

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Exam 6: International Finance and Trade

A domestic importer ordering foreign merchandise from a specific supplier would probably obtain from a Bank A:

The exchange rate is the rate at which a given unit of foreign currency is quoted in terms of:

The ultimate effect of large-scale arbitrage activities on exchange rates is the elimination of the variation between the two markets.

The balance of payments is a summary of all economic transactions between one country and the rest of the world.

A draft that is not accompanied by any special documents and generally used when the exporter has confidence in the importer's ability to meet the draft when presented is known as:

A sight draft is one that is not accompanied by any special documents and is generally used when the exporter has confidence in the importer's ability to meet the draft when presented.

The Federal Reserve System:

The commercial letter of credit is of special usefulness in international transactions when the:

Which of the following statements is false?

A traveler's letter of credit is issued by a bank in one country and addressed to a list of foreign banks which are usually correspondents of the issuing bank and have agreed to purchase sight drafts presented to them by persons with appropriate letters of credit.

Key factors that influence currency exchange rates include all of the following EXCEPT:

Which of the following statements is most correct?

The international monetary system consists of institutions and mechanisms that foster oversees the World Bank,sets international trade policy,and determines the exchange rate regime for all participating countries.

The order bill of lading represents the written acceptance of goods for shipment by a transportation company and the terms under which the goods are to be transported to their destination.

Balances in foreign accounts are maintained for purposes of dealing in foreign exchange by:

The price that an individual must pay when purchasing claims to foreign exchange:

If balances in foreign accounts are substantially reduced due to an excess of demand relative to supply:

The international monetary system consists of institutions and mechanisms that foster international trade,manage the flow of financial capital,and determine currency exchange rates.

The Federal Reserve System:

In the field of foreign trade,the most common form of credit instrument is the:

The Financial Environment

Money and the Monetary System

Banks and Other Financial Institutions

Federal Reserve System

Policy Makers and the Money Supply

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuation

Securities Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters