Question 1

The term "forfaiting"

Accepted Answer

A) means relinquishing, waiving, yielding, and penalty 
B) is a type of medium-term trade financing used to finance the sale of capital goods 
C) involves the sale of promissory notes signed by the importer in favor of the exporter, who might sell the notes at a discount from face value 
D) b and c 
A) means relinquishing, waiving, yielding, and penalty 
B) is a type of medium-term trade financing used to finance the sale of capital goods 
C) involves the sale of promissory notes signed by the importer in favor of the exporter, who might sell the notes at a discount from face value 
D) b and c D

Question 2

The purchase by a third party of one country's clearing agreement balance for hard currency which then in turn is sold is called

Accepted Answer

A) buy-forward 
B) offset 
C) switch trading 
D) counterpurchase 
A) buy-forward 
B) offset 
C) switch trading 
D) counterpurchase C

Question 3

The ________ sends a purchase order to the ________. The________ applies to his bank for a letter of credit.

Accepted Answer

A) importer, exporter, exporter 
B) exporter, importer, importer 
C) importer, exporter, importer 
D) exporter, importer, exporter 
A) importer, exporter, exporter 
B) exporter, importer, importer 
C) importer, exporter, importer 
D) exporter, importer, exporter C

Question 4

Which of the following services are NOT directly offered by EDC?

Accepted Answer

A) Purchase foreign customer's promissory notes 
B) Provide lines of credits to foreign customers 
C) Serves as a Factor (i.e., buys receivables) 
D) All of these services are directly offered by EDC 
A) Purchase foreign customer's promissory notes 
B) Provide lines of credits to foreign customers 
C) Serves as a Factor (i.e., buys receivables) 
D) All of these services are directly offered by EDC

Question 5

A letter of credit is

Accepted Answer

A) A guarantee from the importer's bank that is will act on behalf of the importer and pay the exporter for the merchandise if all relevant documents are presented 
B) Is a written order instructing the importer or his agent to pay the amount specified on its face on a certain date 
C) Is a document issued by the common carrier specifying that it has received the goods for shipment 
D) Is a negotiable money market instrument for which a secondary market exists 
A) A guarantee from the importer's bank that is will act on behalf of the importer and pay the exporter for the merchandise if all relevant documents are presented 
B) Is a written order instructing the importer or his agent to pay the amount specified on its face on a certain date 
C) Is a document issued by the common carrier specifying that it has received the goods for shipment 
D) Is a negotiable money market instrument for which a secondary market exists

Question 6

Explain the major differences between international and domestic trade.

Accepted Answer

International trade is more difficult th

Question 7

If the market rate for 90-day B/As is 6.0 percent,calculate the amount the exporter will receive if he discounts the B/A with the importer's bank.

Accepted Answer

A) $2,945,625 
B) $2,990,625 
C) $3,000,000 
D) $3,009,375 
A) $2,945,625 
B) $2,990,625 
C) $3,000,000 
D) $3,009,375

Question 8

A form of barter in which the counterparties contract to purchase a certain amount of goods and services from one another is called

Accepted Answer

A) counterpuchase 
B) clearing arrangement 
C) barter 
D) offset 
A) counterpuchase 
B) clearing arrangement 
C) barter 
D) offset

Question 9

A time draft is

Accepted Answer

A) A guarantee from the importer's bank that is will act on behalf of the importer and pay the exporter for the merchandise if all relevant documents are presented. 
B) Is a written order instructing the importer or his agent to pay the amount specified on its face on a certain date 
C) Is a document issued by the common carrier specifying that it has received the goods for shipment 
D) Is a negotiable money market instrument for which a secondary market exists 
A) A guarantee from the importer's bank that is will act on behalf of the importer and pay the exporter for the merchandise if all relevant documents are presented. 
B) Is a written order instructing the importer or his agent to pay the amount specified on its face on a certain date 
C) Is a document issued by the common carrier specifying that it has received the goods for shipment 
D) Is a negotiable money market instrument for which a secondary market exists

Question 10

International trade is more difficult and risky from the exporter's perspective than is domestic trade because:

Accepted Answer

A) the exporter may not be familiar with the buyer, and thus not know if the importer is a good credit risk 
B) if the merchandise is exported abroad and the buyer does not pay, it may prove difficult, if not impossible, for the exporter to have any legal recourse 
C) political instability makes it risky to ship merchandise abroad certain to parts of the world 
D) all of these 
A) the exporter may not be familiar with the buyer, and thus not know if the importer is a good credit risk 
B) if the merchandise is exported abroad and the buyer does not pay, it may prove difficult, if not impossible, for the exporter to have any legal recourse 
C) political instability makes it risky to ship merchandise abroad certain to parts of the world 
D) all of these

Question 11

A banker's acceptance is

Accepted Answer

A) A guarantee from the importer's bank that is will act on behalf of the importer and pay the exporter for the merchandise if all relevant documents are presented 
B) Is a written order instructing the importer or his agent to pay the amount specified on its face on a certain date 
C) Is a document issued by the common carrier specifying that it has received the goods for shipment 
D) Is a negotiable money market instrument for which a secondary market exists 
A) A guarantee from the importer's bank that is will act on behalf of the importer and pay the exporter for the merchandise if all relevant documents are presented 
B) Is a written order instructing the importer or his agent to pay the amount specified on its face on a certain date 
C) Is a document issued by the common carrier specifying that it has received the goods for shipment 
D) Is a negotiable money market instrument for which a secondary market exists

Question 12

The ________'s bank sends the letter of credit to the ________'s bank.After sending the merchandise,the ________ gives the shipping documents and time draft to his bank.

Accepted Answer

A) importer, exporter, exporter 
B) exporter, importer, importer 
C) importer, exporter, importer 
D) exporter, importer, exporter 
A) importer, exporter, exporter 
B) exporter, importer, importer 
C) importer, exporter, importer 
D) exporter, importer, exporter

Question 13

If the importing bank's acceptance commission is 1.25 percent,determine the amount the exporter will receive if he holds the B/A until maturity.

Accepted Answer

A) $2,945,625 
B) $2,990,625 
C) $3,000,000 
D) $3,009,375 
A) $2,945,625 
B) $2,990,625 
C) $3,000,000 
D) $3,009,375

Question 14

Name and explain the three most important documents in a typical international trade transaction.

Accepted Answer

The three most important documents are t

Question 15

A bill of lading is

Accepted Answer

A) A guarantee from the importer's bank that is will act on behalf of the importer and pay the exporter for the merchandise if all relevant documents are presented 
B) Is a written order instructing the importer or his agent to pay the amount specified on its face on a certain date 
C) Is a document issued by the common carrier specifying that it has received the goods for shipment 
D) Is a negotiable money market instrument for which a secondary market exists 
A) A guarantee from the importer's bank that is will act on behalf of the importer and pay the exporter for the merchandise if all relevant documents are presented 
B) Is a written order instructing the importer or his agent to pay the amount specified on its face on a certain date 
C) Is a document issued by the common carrier specifying that it has received the goods for shipment 
D) Is a negotiable money market instrument for which a secondary market exists

Question 16

Which forms of countertrade involve the use of money?

Accepted Answer

A) Barter, switch trading, buyback 
B) Barter, clearing arrangement, switch trading 
C) Buy-back, switch trading, counterpurchase 
D) Buy-back, counterpurchase, offset 
A) Barter, switch trading, buyback 
B) Barter, clearing arrangement, switch trading 
C) Buy-back, switch trading, counterpurchase 
D) Buy-back, counterpurchase, offset

Question 17

If the value at maturity is $2,860,000 calculate the 90-day B/A rate.

Accepted Answer

A) 5.2% 
B) 6.4% 
C) 7.4% 
D) 8.2% 
A) 5.2% 
B) 6.4% 
C) 7.4% 
D) 8.2%

Question 18

If the 90-day B/A rates are 5%,determine the amount the exporter will receive if he holds the B/A until maturity.

Accepted Answer

A) $2,800,000 
B) $2,807,018 
C) $2,842,640 
D) $3,000,000 
A) $2,800,000 
B) $2,807,018 
C) $2,842,640 
D) $3,000,000

Question 19

The primary methods of payment for foreign trades,ranked in the order of most secure to least secure for the exporter is:

Accepted Answer

A) open account, consignment, letter of credit/time draft, and cash in advance 
B) consignment, letter of credit/time draft, cash in advance, and open account 
C) cash in advance, letter of credit/ time draft, consignment, and open account 
D) cash in advance, letter of credit/ time draft, open account, and consignment 
A) open account, consignment, letter of credit/time draft, and cash in advance 
B) consignment, letter of credit/time draft, cash in advance, and open account 
C) cash in advance, letter of credit/ time draft, consignment, and open account 
D) cash in advance, letter of credit/ time draft, open account, and consignment

Question 20

The three basic documents needed in a foreign trade transaction are:

Accepted Answer

A) letter of credit, time draft, and proof of inspection 
B) letter of credit, time draft, and a bill of lading 
C) letter of credit, bill of lading, and insurance 
D) time draft, bill of lading, and a pro forma statement 
A) letter of credit, time draft, and proof of inspection 
B) letter of credit, time draft, and a bill of lading 
C) letter of credit, bill of lading, and insurance 
D) time draft, bill of lading, and a pro forma statement

Exam 19: Multinational Cash Management

The term "forfaiting"

The purchase by a third party of one country's clearing agreement balance for hard currency which then in turn is sold is called

The ________ sends a purchase order to the ________. The________ applies to his bank for a letter of credit.

Which of the following services are NOT directly offered by EDC?

A letter of credit is

Explain the major differences between international and domestic trade.

If the market rate for 90-day B/As is 6.0 percent,calculate the amount the exporter will receive if he discounts the B/A with the importer's bank.

A form of barter in which the counterparties contract to purchase a certain amount of goods and services from one another is called

A time draft is

International trade is more difficult and risky from the exporter's perspective than is domestic trade because:

A banker's acceptance is

The ________'s bank sends the letter of credit to the ________'s bank.After sending the merchandise,the ________ gives the shipping documents and time draft to his bank.

If the importing bank's acceptance commission is 1.25 percent,determine the amount the exporter will receive if he holds the B/A until maturity.

Name and explain the three most important documents in a typical international trade transaction.

A bill of lading is

Which forms of countertrade involve the use of money?

If the value at maturity is $2,860,000 calculate the 90-day B/A rate.

If the 90-day B/A rates are 5%,determine the amount the exporter will receive if he holds the B/A until maturity.

The primary methods of payment for foreign trades,ranked in the order of most secure to least secure for the exporter is:

The three basic documents needed in a foreign trade transaction are:

Globalization and the Multinational Firm

International Monetary System

Balance of Payments

Corporate Governance Around the World

The Market for Foreign Exchange

International Parity Relationships and Forecasting Foreign Exchange Rates

Futures and Options on Foreign Exchange

Management of Transaction Exposure

Management of Economic Exposure

Management of Translation Exposure

International Banking and Money Market

International Bond Market

International Equity Markets

Interest Rate and Currency Swaps

International Portfolio Investment

Foreign Direct Investment and Cross-Border Acquisitions

International Capital Structure and the Cost of Capital

International Capital Budgeting

International Trade Finance

International Tax Environment and Transfer Pricing

Filters

The sends a purchase order to the . The applies to his bank for a letter of credit.

The 's bank sends the letter of credit to the 's bank.After sending the merchandise,the gives the shipping documents and time draft to his bank.