Question 1

In the event of a default

Accepted Answer

A) the forfait does not have recourse against the exporter in the event of a default by the importer. 
B) the forfait does have recourse against the exporter in the event of a default by the importer. 
C) the exporter will have to return the goods to the importer. 
D) none of the above. 
A) the forfait does not have recourse against the exporter in the event of a default by the importer. 
B) the forfait does have recourse against the exporter in the event of a default by the importer. 
C) the exporter will have to return the goods to the importer. 
D) none of the above. A

Question 2

Assume the time from acceptance to maturity on a $4,000,000 banker's acceptance is 180 days.Further assume that the importing bank's acceptance commission is 1.25 percent and that the market rate for 90-day B/As is 6.0 percent.Calculate the amount the exporter will receive if he holds it to maturity.

Accepted Answer

A) $3,993,750 
B) $3,999,375 
C) $3,975,000 
D) $3,009,375 
A) $3,993,750 
B) $3,999,375 
C) $3,975,000 
D) $3,009,375 C

Question 3

If the exporter's opportunity cost of capital is 11 percent,should he discount the B/A or hold it to maturity?

Accepted Answer

If his cost of funds > 6.1% compounded quarterly (EAR = 6.24%),he should discount the B/A.
The exporter pays the acceptance commission regardless of whether he discounts the B/A or holds it to maturity,hence it is not marginal to a decision to discount the B/A.
You could also make this determination based on this calculation: $$\$ 1,963,750 \times \left( 1 + .11 \times \frac { 90 } { 360 } \right) = \$ 2,017,753 > \$ 1,993,750$$

Question 4

Forfaiting,in which a bank purchases at a discount from an importer a series of promissory notes in favor of an exporter,

Accepted Answer

A) is a short-term form of trade financing. 
B) is a medium-term form of trade financing. 
C) is a long-term form of trade financing. 
D) none of the above 
A) is a short-term form of trade financing. 
B) is a medium-term form of trade financing. 
C) is a long-term form of trade financing. 
D) none of the above

Question 5

Some Generalizations about Countertrade
The time from acceptance to maturity on a $30,000,000 banker's acceptance is 45 days.
The importing bank's acceptance commission is 1.5 percent and that the market rate for 45-day B/As is 4½ percent.
-Calculate the amount the banker will receive if the exporter discounts the B/A with the importer's bank.

Accepted Answer

The answer of Some Generalizations about Countertrade
The time from acceptance...

Question 6

Some Generalizations about Countertrade
The time from acceptance to maturity on a $30,000,000 banker's acceptance is 45 days.
The importing bank's acceptance commission is 1.5 percent and that the market rate for 45-day B/As is 4½ percent.
-Determine the amount the exporter will receive if he holds the B/A until maturity.

Accepted Answer

The answer of Some Generalizations about Countertrade
The time from acceptance...

Question 7

Some Generalizations about Countertrade
The time from acceptance to maturity on a $1,000,000 banker's acceptance is 90 days.
The importing bank's acceptance commission is 3½ percent and that the market rate for 90-day B/As is 5 percent.
-Determine the amount the exporter will receive if he holds the B/A until maturity.

Accepted Answer

The answer of Some Generalizations about Countertrade
The time from acceptance...

Question 8

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 the above 
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 the above

Question 9

Assume the time from acceptance to maturity on a $10,000,000 banker's acceptance is 90 days.Further assume that the importing bank's acceptance commission is 1 percent and that the market rate for 90-day B/As is 3.0 percent.Calculate the amount the exporter will receive if he discounts the B/A with the importer's bank.

Accepted Answer

A) $9,993,750 
B) $9,900,000 
C) $9,975,000 
D) $9,009,375 
A) $9,993,750 
B) $9,900,000 
C) $9,975,000 
D) $9,009,375

Question 10

Some Generalizations about Countertrade
The time from acceptance to maturity on a $6,000,000 banker's acceptance is 360 days.
The importing bank's acceptance commission is 2 percent and that the market rate for 360-day B/As is 3 percent.
-Determine the bond equivalent yield the importer's bank will earn from discounting the B/A with the exporter.

Accepted Answer

If the exporter holds the B/A to maturit

Question 11

Assume the time from acceptance to maturity on a $2,000,000 banker's acceptance is 180 days.Further assume that the importing bank's acceptance commission is 1.25 percent and that the market rate for 180-day B/As is 5.0 percent.The bond equivalent yield that the bank earns in holding the B/A to maturity is:

Accepted Answer

A) 13.08% 
B) 6.54% 
C) 4.06% 
D) None of the above 
A) 13.08% 
B) 6.54% 
C) 4.06% 
D) None of the above

Question 12

Forfaiting meets Islamic finance practices.

Accepted Answer

A) True 
 B)False

Question 13

Some Generalizations about Countertrade
The time from acceptance to maturity on a $500,000 banker's acceptance is 270 days.
The importing bank's acceptance commission is 0.75 percent and that the market rate for 270-day B/As is 4 percent.
-Calculate the amount the banker will receive if the exporter discounts the B/A with the importer's bank.

Accepted Answer

The answer of Some Generalizations about Countertrade
The time from acceptance...

Question 14

Some Generalizations about Countertrade
The time from acceptance to maturity on a $30,000,000 banker's acceptance is 45 days.
The importing bank's acceptance commission is 1.5 percent and that the market rate for 45-day B/As is 4½ percent.
-Determine the amount the exporter will receive if he discounts the B/A with the importer's bank.

Accepted Answer

The answer of Some Generalizations about Countertrade
The time from acceptance...

Question 15

One of the steps to follow to develop an investment fund which has been structured to adhere to Shari'ah principles whilst at the same time making use of forfaiting assets was

Accepted Answer

A) the fund sponsors had to be careful in ensuring that the pool of non-Islamic forfaiting assets was not used to directly satisfy the Islamically compliant obligations under the commodity and trade financing arrangements. 
B) screening is required to ensure that the products underlying the LCs do not run counter to Shari'ah principles. 
C) there had to be a signoff by Islamic scholars to verify that Shari'ah strictures had been met with. 
D) all of the above 
A) the fund sponsors had to be careful in ensuring that the pool of non-Islamic forfaiting assets was not used to directly satisfy the Islamically compliant obligations under the commodity and trade financing arrangements. 
B) screening is required to ensure that the products underlying the LCs do not run counter to Shari'ah principles. 
C) there had to be a signoff by Islamic scholars to verify that Shari'ah strictures had been met with. 
D) all of the above

Question 16

Some Generalizations about Countertrade
The time from acceptance to maturity on a $1,000,000 banker's acceptance is 90 days.
The importing bank's acceptance commission is 3½ percent and that the market rate for 90-day B/As is 5 percent.
-Determine the bond equivalent yield the importer's bank will earn from discounting the B/A with the exporter.

Accepted Answer

If the exporter holds the B/A to maturit

Question 17

Among the reasons put forth for government assistance in exporting

Accepted Answer

A) success in international trade is fundamentally important for a country. 
B) success in exporting implies that there is demand for a country's products, that its labor force is employed, and that some resources are used for technological advancement. 
C) to be successful in international trade means that the government is popular. 
D) both a and b 
A) success in international trade is fundamentally important for a country. 
B) success in exporting implies that there is demand for a country's products, that its labor force is employed, and that some resources are used for technological advancement. 
C) to be successful in international trade means that the government is popular. 
D) both a and b

Question 18

Determine the bond equivalent yield the importer's bank will earn from discounting the B/A with the exporter.

Accepted Answer

If the exporter holds the B/A to maturit

Question 19

Some Generalizations about Countertrade
The time from acceptance to maturity on a $6,000,000 banker's acceptance is 360 days.
The importing bank's acceptance commission is 2 percent and that the market rate for 360-day B/As is 3 percent.
-Determine the amount the exporter will receive if he discounts the B/A with the importer's bank.

Accepted Answer

The answer of Some Generalizations about Countertrade
The time from acceptance...

Question 20

Some Generalizations about Countertrade
The time from acceptance to maturity on a $1,000,000 banker's acceptance is 60 days.
The importing bank's acceptance commission is 1.00 percent and that the market rate for 60-day B/As is 5 percent.
-Determine the bond equivalent yield the importer's bank will earn from discounting the B/A with the exporter.

Accepted Answer

If the exporter holds the B/A to maturit

In the event of a default

If the exporter's opportunity cost of capital is 11 percent,should he discount the B/A or hold it to maturity?

Forfaiting,in which a bank purchases at a discount from an importer a series of promissory notes in favor of an exporter,

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

Forfaiting meets Islamic finance practices.

One of the steps to follow to develop an investment fund which has been structured to adhere to Shari'ah principles whilst at the same time making use of forfaiting assets was

Among the reasons put forth for government assistance in exporting

Determine the bond equivalent yield the importer's bank will earn from discounting the B/A with the exporter.

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

Multinational Cash Management

International Tax Environment and Transfer Pricing

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Exam 20: International Trade Finance

In the event of a default

If the exporter's opportunity cost of capital is 11 percent,should he discount the B/A or hold it to maturity?

Forfaiting,in which a bank purchases at a discount from an importer a series of promissory notes in favor of an exporter,

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

Forfaiting meets Islamic finance practices.

One of the steps to follow to develop an investment fund which has been structured to adhere to Shari'ah principles whilst at the same time making use of forfaiting assets was

Among the reasons put forth for government assistance in exporting

Determine the bond equivalent yield the importer's bank will earn from discounting the B/A with the exporter.

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

Multinational Cash Management

International Tax Environment and Transfer Pricing

Filters