Question 1

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 maturity he will receive:   If the exporter discounts the B/A with the importer bank he will receive:   The bond equivalent yield that the exporter pays in discounting the B/A is

Question 2

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. B

Question 3

Determine the amount the exporter will receive if he discounts the B/A with the importer's bank.

Accepted Answer

The answer of Determine the amount the exporter will receive...

Question 4

Determine the amount the exporter will receive if he discounts the B/A with the importer's bank.

Accepted Answer

The answer of Determine the amount the exporter will receive...

Question 5

Determine the amount the exporter will receive if he holds the B/A until maturity.

Accepted Answer

The answer of Determine the amount the exporter will receive...

Question 6

A time draft can become a negotiable money market instrument called

Accepted Answer

A) Eurodollars. 
B) a banker's acceptance. 
C) a letter of credit. 
D) a bill of lading. 
A) Eurodollars. 
B) a banker's acceptance. 
C) a letter of credit. 
D) a bill of lading.

Question 7

An offset transaction

Accepted Answer

A) can be viewed as a counterpurchase trade agreement involving the aerospace/defense industry. 
B) involves a technology transfer via the sale of a manufacturing plant: as part of the terms, the seller of the plant agrees to purchase a certain portion of the plant output. 
C) is the purchase by a third party of one country's a clearing agreement balance for hard currency. 
D) none of the above 
A) can be viewed as a counterpurchase trade agreement involving the aerospace/defense industry. 
B) involves a technology transfer via the sale of a manufacturing plant: as part of the terms, the seller of the plant agrees to purchase a certain portion of the plant output. 
C) is the purchase by a third party of one country's a clearing agreement balance for hard currency. 
D) none of the above

Question 8

Export-Import Bank (Eximbank) is an independent agency of the United States government that facilitates and finances U.S. export trade. Eximbank's purpose is to provide financing in situations where private financial institutions are unable or unwilling to because of which of the following reasons: (i) - the loan maturity is too long
(ii) - the amount of the loan is too large
(iii) - the loan risk is too great
(iv) - the importing firm has difficulty obtaining hard currency for payment
(v) - there are no futures or forward contracts available for foreign exchange transactions

Accepted Answer

A) (i) and (ii) 
B) (i), (ii), and (iii) 
C) (i), (ii), (iii), and (iv) 
D) (i), (ii), (iii), (iv), and (v) 
A) (i) and (ii) 
B) (i), (ii), and (iii) 
C) (i), (ii), (iii), and (iv) 
D) (i), (ii), (iii), (iv), and (v)

Question 9

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 > 4.57% compounded

Question 10

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

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 12

Assume the time from acceptance to maturity on a $5,000,000 banker's acceptance is 90 days. Further assume that the importing bank's acceptance commission is 1.5 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) $4,981,750 
B) $4,906,250 
C) $4,009,375 
D) none of the above 
A) $4,981,750 
B) $4,906,250 
C) $4,009,375 
D) none of the above

Question 13

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 > 4.07% compounded

Question 14

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 15

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 q

Question 16

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

A typical foreign trade transaction requires three basic documents:

Accepted Answer

A) letter of credit, time draft, and bill of lading. 
B) letter of credit, banker's acceptance, and bill of lading. 
C) letter of credit, time draft, and a banker's acceptance. 
D) none of the above 
A) letter of credit, time draft, and bill of lading. 
B) letter of credit, banker's acceptance, and bill of lading. 
C) letter of credit, time draft, and a banker's acceptance. 
D) none of the above

Question 18

Determine the amount the exporter will receive if he discounts the B/A with the importer's bank.

Accepted Answer

The answer of Determine the amount the exporter will receive...

Question 19

Suppose the face amount of a promissory note is $1,000,000 and the importer's bank charges an acceptance commission of 1.5 percent. The note is for 60 days. Calculate the amount of the acceptance commission that the bank will charge.

Accepted Answer

A) $997,500 
B) $15,000 = $1,000,000 × (0.015) 
C) $2,500 
D) None of the above 
A) $997,500 
B) $15,000 = $1,000,000 × (0.015) 
C) $2,500 
D) None of the above

Question 20

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

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

The three basic documents needed in a foreign trade transaction are

Determine the amount the exporter will receive if he discounts the B/A with the importer's bank.

Determine the amount the exporter will receive if he discounts the B/A with the importer's bank.

Determine the amount the exporter will receive if he holds the B/A until maturity.

A time draft can become a negotiable money market instrument called

An offset transaction

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

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

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

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

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

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

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

A typical foreign trade transaction requires three basic documents:

Determine the amount the exporter will receive if he discounts the B/A with the importer's bank.

Suppose the face amount of a promissory note is $1,000,000 and the importer's bank charges an acceptance commission of 1.5 percent. The note is for 60 days. Calculate the amount of the acceptance commission that the bank will charge.

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

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

The three basic documents needed in a foreign trade transaction are

Determine the amount the exporter will receive if he discounts the B/A with the importer's bank.

Determine the amount the exporter will receive if he discounts the B/A with the importer's bank.

Determine the amount the exporter will receive if he holds the B/A until maturity.

A time draft can become a negotiable money market instrument called

An offset transaction

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

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

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

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

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

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

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

A typical foreign trade transaction requires three basic documents:

Determine the amount the exporter will receive if he discounts the B/A with the importer's bank.

Suppose the face amount of a promissory note is $1,000,000 and the importer's bank charges an acceptance commission of 1.5 percent. The note is for 60 days. Calculate the amount of the acceptance commission that the bank will charge.

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