Question 1

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 2

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 3

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

Accepted Answer

A) True 
 B)False

Question 4

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 5

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. ________ 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 6

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 7

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 writt

Question 8

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 9

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 10

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 11

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 12

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 13

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 14

________ are documents included in a contract to ensure that specific quality, purity, or weight specifications are met.

Accepted Answer

A)  Consular invoices 
B)  Insurance documents 
C)  Certificates of analysis 
D)  None of the above 
A)  Consular invoices 
B)  Insurance documents 
C)  Certificates of analysis 
D)  None of the above

Question 15

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.

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

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).

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

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

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

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

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.

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

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

The three parties to a letter of credit are

________ are documents included in a contract to ensure that specific quality, purity, or weight specifications are met.

The draft is the instrument normally used in international commerce 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

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Exam 20: International Trade Finance

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

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).

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

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

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

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

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.

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

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

The three parties to a letter of credit are

________ are documents included in a contract to ensure that specific quality, purity, or weight specifications are met.

The draft is the instrument normally used in international commerce 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