Question 1

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 2

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 3

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 4

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 5

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.

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

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

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.

Which are NOT types of letter of credit?

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

Multinational Financial Management: Opportunities and Challenges

The International Monetary System

The Balance of Payments

Financial Goals and Corporate Governance

The Foreign Exchange Market

International Parity Conditions

Foreign Currency Derivatives and Swaps

Foreign Exchange Rate Determination

Transaction Exposure

Translation Exposure

Operating Exposure

The Global Cost and Availability of Capital

Raising Equity and Debt Globally

Multinational Tax Management

Foreign Direct Investment and Political Risk

Multinational Capital Budgeting and Cross-Border Acquisitions

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Exam 15: International Trade Finance

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

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

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.

Which are NOT types of letter of credit?

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

Multinational Financial Management: Opportunities and Challenges

The International Monetary System

The Balance of Payments

Financial Goals and Corporate Governance

The Foreign Exchange Market

International Parity Conditions

Foreign Currency Derivatives and Swaps

Foreign Exchange Rate Determination

Transaction Exposure

Translation Exposure

Operating Exposure

The Global Cost and Availability of Capital

Raising Equity and Debt Globally

Multinational Tax Management

Foreign Direct Investment and Political Risk

Multinational Capital Budgeting and Cross-Border Acquisitions

Filters