Question 1

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 2

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 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

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

Accepted Answer

A)  bill of lading 
B)  draft 
C)  banker's acceptance 
D)  line of credit 
A)  bill of lading 
B)  draft 
C)  banker's acceptance 
D)  line of credit

Question 5

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 6

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.

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

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 con

Question 9

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 10

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 11

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

Accepted Answer

A) True 
 B)False

Question 12

________ 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 13

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 14

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 15

The disadvantages of a letter of credit to the importer include

Accepted Answer

A)  the exporter's reduced line of credit as a result of the letter of credit. 
B)  the fee charged by the exporter's bank for accepting the letter of credit. 
C)  the fee charged by the importer's bank for issuing the letter of credit. 
D)  All of the above. 
A)  the exporter's reduced line of credit as a result of the letter of credit. 
B)  the fee charged by the exporter's bank for accepting the letter of credit. 
C)  the fee charged by the importer's bank for issuing the letter of credit. 
D)  All of the above.

Question 16

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 17

Instruction 20.1:
Use the information to answer 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 20.1. 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 18

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 19

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 20

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.

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

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

Which are NOT types of letter of credit?

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

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

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

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

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.

Drafts that have been accepted by banks become

A fundamental problem of international trade is

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.

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.

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

The disadvantages of a letter of credit to the importer include

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

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

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

Globalization and the Multinational Enterprise

Financial Goals and Corporate Governance

The International Monetary System

The Balance of Payments

The Foreign Exchange Market

International Parity Conditions

Foreign Exchange Rate Determination and Forecasting

Foreign Currency Derivatives

Transaction Exposure

Operating Exposure

Translation Exposure

Global Cost and Availability of Capital

Sourcing Equity Capital Globally

Financial Structure and International Debt

Interest Rate and Currency Swaps

International Portfolio Theory and Diversification

Foreign Direct Investment Theory and Strategy

Political Risk Assessment and Management

Multinational Capital Budgeting

Multinational Tax Management

Working Capital Management

Filters

Exam 20: International Trade Finance

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

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

Which are NOT types of letter of credit?

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

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

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

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

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.

Drafts that have been accepted by banks become

A fundamental problem of international trade is

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.

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.

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

The disadvantages of a letter of credit to the importer include

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

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

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

Globalization and the Multinational Enterprise

Financial Goals and Corporate Governance

The International Monetary System

The Balance of Payments

The Foreign Exchange Market

International Parity Conditions

Foreign Exchange Rate Determination and Forecasting

Foreign Currency Derivatives

Transaction Exposure

Operating Exposure

Translation Exposure

Global Cost and Availability of Capital

Sourcing Equity Capital Globally

Financial Structure and International Debt

Interest Rate and Currency Swaps

International Portfolio Theory and Diversification

Foreign Direct Investment Theory and Strategy

Political Risk Assessment and Management

Multinational Capital Budgeting

Multinational Tax Management

Working Capital Management

Filters