Question 1

In effect, the commercial letter of credit enables the importer to:

Accepted Answer

A) substitute the bank's financial strength for his or her own 
B) shift the burden of financing the transaction to the exporter 
C) borrow from his or her bank on the basis of merchandise importer 
D) have ample of time to sell the imported merchandise and meet payment obligations 
A) substitute the bank's financial strength for his or her own 
B) shift the burden of financing the transaction to the exporter 
C) borrow from his or her bank on the basis of merchandise importer 
D) have ample of time to sell the imported merchandise and meet payment obligations

Question 2

The International Monetary Fund (IMF) was created to promote world trade through monitoring and maintaining fixed exchange rates and by making loans to countries with payment problems.

Accepted Answer

A) True 
 B)False

Question 3

The bankers' acceptance and the documentary draft involve four principal parties: the importer, the importer's bank, the exporter, and the exporter's bank.

Accepted Answer

A) True 
 B)False

Question 4

The exchange rate is the rate at which a given unit of foreign currency is quoted in terms of:

Accepted Answer

A) commodity prices 
B) the domestic currency 
C) the foreign currency 
D) gold 
A) commodity prices 
B) the domestic currency 
C) the foreign currency 
D) gold

Question 5

An unconditional order for the payment of money from one person to another is called a (n)

Accepted Answer

A) bill of exchange 
B) sight draft 
C) time draft 
D) documentary draft 
A) bill of exchange 
B) sight draft 
C) time draft 
D) documentary draft

Question 6

Which of the following statements is most correct?

Accepted Answer

A) 	A weaker dollar results in more imports of foreign merchandise since it requires fewer dollars for purchase. 
B) 	A stronger dollar results in fewer imports of foreign merchandise since it requires fewer dollars for purchase. 
C) 	A stronger dollar results in more imports of foreign merchandise since it requires fewer dollars for purchase. 
D) 	A weaker dollar results in more imports of foreign merchandise since it requires more dollars for purchase. 
E) 	none of the above 
A) 	A weaker dollar results in more imports of foreign merchandise since it requires fewer dollars for purchase. 
B) 	A stronger dollar results in fewer imports of foreign merchandise since it requires fewer dollars for purchase. 
C) 	A stronger dollar results in more imports of foreign merchandise since it requires fewer dollars for purchase. 
D) 	A weaker dollar results in more imports of foreign merchandise since it requires more dollars for purchase. 
E) 	none of the above

Question 7

The international monetary system consists of institutions and mechanisms that foster oversees the World Bank, sets international trade policy, and determines the exchange rate regime for all participating countries.

Accepted Answer

A) True 
 B)False

Question 8

A sight draft is one that is not accompanied by any special documents and is generally used when the exporter has confidence in the importer's ability to meet the draft when presented.

Accepted Answer

A) True 
 B)False

Question 9

A draft that is accompanied by an order bill of lading and other documents is called a (n)

Accepted Answer

A) bill of exchange 
B) sight draft 
C) time draft 
D) documentary draft 
A) bill of exchange 
B) sight draft 
C) time draft 
D) documentary draft

Question 10

International financial markets strongly influence domestic interest rates.

Accepted Answer

A) True 
 B)False

Question 11

Commercial letters of credit are:

Accepted Answer

A) customarily required by importers of their suppliers 
B) negotiable in the money markets of major cities 
C) customarily provided by banks to their customers to accommodate their import activities 
D) ordinarily provided by issuing bank at no charge to customers 
A) customarily required by importers of their suppliers 
B) negotiable in the money markets of major cities 
C) customarily provided by banks to their customers to accommodate their import activities 
D) ordinarily provided by issuing bank at no charge to customers

Question 12

A stronger U.S.dollar generally

Accepted Answer

A) results in more imports of foreign merchandise 
B) leads to concern about worsening trade deficits 
C) results in lower domestic inflation 
D) all of the above 
A) results in more imports of foreign merchandise 
B) leads to concern about worsening trade deficits 
C) results in lower domestic inflation 
D) all of the above

Question 13

In the field of foreign trade, the most common form of credit instrument is the:

Accepted Answer

A) bankers' acceptance 
B) trust receipt 
C) sight draft 
D) none of the above 
A) bankers' acceptance 
B) trust receipt 
C) sight draft 
D) none of the above

Question 14

Special Drawing Rights are international reserve assets created by the International Monetary Fund that can be drawn upon by member nations.

Accepted Answer

A) True 
 B)False

Question 15

The manager of the foreign exchange office of a multinational corporation could, in anticipation of a decline in the value of currency of one of its foreign accounts:

Accepted Answer

A) borrow in that country and add to its account with that branch 
B) accelerate the timing of remitting on the payables of that foreign branch 
C) enter into a futures contract for delivery of that currency at today's rate 
D) shift funds from branches in other countries to that foreign branch 
A) borrow in that country and add to its account with that branch 
B) accelerate the timing of remitting on the payables of that foreign branch 
C) enter into a futures contract for delivery of that currency at today's rate 
D) shift funds from branches in other countries to that foreign branch

Question 16

Foreign exchange markets may be described as:

Accepted Answer

A) specific locations in major industrial cities 
B) major financial centers connected by good communications systems 
C) money markets outside of the United States 
D) facilities of central banks for foreign exchange 
A) specific locations in major industrial cities 
B) major financial centers connected by good communications systems 
C) money markets outside of the United States 
D) facilities of central banks for foreign exchange

Question 17

The Federal Reserve System:

Accepted Answer

A) permits member banks to accept drafts, but restricts the time period involved 
B) actively encourages member banks to assist in financing international transactions 
C) discourages its member banks from accepting foreign drafts 
D) limits the type of international transactions for which member banks may accept drafts 
E) all of the above 
A) permits member banks to accept drafts, but restricts the time period involved 
B) actively encourages member banks to assist in financing international transactions 
C) discourages its member banks from accepting foreign drafts 
D) limits the type of international transactions for which member banks may accept drafts 
E) all of the above

Question 18

An order bill of lading is a document given by a transportation company that lists goods to be transported and terms of the shipping agreement.

Accepted Answer

A) True 
 B)False

Question 19

A stronger U.S.dollar generally

Accepted Answer

A) results in more imports of foreign merchandise 
B) leads to concern about worsening trade deficits 
C) results in lower domestic inflation 
D) all of the above 
E) none of the above 
A) results in more imports of foreign merchandise 
B) leads to concern about worsening trade deficits 
C) results in lower domestic inflation 
D) all of the above 
E) none of the above

Question 20

For most of the remainder of the decade after the September 11th terrorist attacks the Fed maintained a high liquidity, low interest rate environment, which was accompanied by:

Accepted Answer

A) very little borrowing by business firms, financial institutions, and individuals. 
B) large amounts of borrowing by business firms, financial institutions, and individuals. 
C) a massive divestment of assets by business firms, financial institutions, and individuals. 
D) a massive reduction of inventory levels by business firms. 
E) none of the above 
A) very little borrowing by business firms, financial institutions, and individuals. 
B) large amounts of borrowing by business firms, financial institutions, and individuals. 
C) a massive divestment of assets by business firms, financial institutions, and individuals. 
D) a massive reduction of inventory levels by business firms. 
E) none of the above

In effect, the commercial letter of credit enables the importer to:

The International Monetary Fund (IMF) was created to promote world trade through monitoring and maintaining fixed exchange rates and by making loans to countries with payment problems.

The bankers' acceptance and the documentary draft involve four principal parties: the importer, the importer's bank, the exporter, and the exporter's bank.

The exchange rate is the rate at which a given unit of foreign currency is quoted in terms of:

An unconditional order for the payment of money from one person to another is called a (n)

Which of the following statements is most correct?

The international monetary system consists of institutions and mechanisms that foster oversees the World Bank, sets international trade policy, and determines the exchange rate regime for all participating countries.

A sight draft is one that is not accompanied by any special documents and is generally used when the exporter has confidence in the importer's ability to meet the draft when presented.

A draft that is accompanied by an order bill of lading and other documents is called a (n)

International financial markets strongly influence domestic interest rates.

Commercial letters of credit are:

A stronger U.S.dollar generally

In the field of foreign trade, the most common form of credit instrument is the:

Special Drawing Rights are international reserve assets created by the International Monetary Fund that can be drawn upon by member nations.

The manager of the foreign exchange office of a multinational corporation could, in anticipation of a decline in the value of currency of one of its foreign accounts:

Foreign exchange markets may be described as:

The Federal Reserve System:

An order bill of lading is a document given by a transportation company that lists goods to be transported and terms of the shipping agreement.

A stronger U.S.dollar generally

For most of the remainder of the decade after the September 11th terrorist attacks the Fed maintained a high liquidity, low interest rate environment, which was accompanied by:

The Financial Environment

Money and the Monetary System

Banks and Other Financial Institutions

Federal Reserve System

Policy Makers and the Money Supply

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuation

Securities Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters

Exam 6: International Finance and Trade

In effect, the commercial letter of credit enables the importer to:

The International Monetary Fund (IMF) was created to promote world trade through monitoring and maintaining fixed exchange rates and by making loans to countries with payment problems.

The bankers' acceptance and the documentary draft involve four principal parties: the importer, the importer's bank, the exporter, and the exporter's bank.

The exchange rate is the rate at which a given unit of foreign currency is quoted in terms of:

An unconditional order for the payment of money from one person to another is called a (n)

Which of the following statements is most correct?

The international monetary system consists of institutions and mechanisms that foster oversees the World Bank, sets international trade policy, and determines the exchange rate regime for all participating countries.

A sight draft is one that is not accompanied by any special documents and is generally used when the exporter has confidence in the importer's ability to meet the draft when presented.

A draft that is accompanied by an order bill of lading and other documents is called a (n)

International financial markets strongly influence domestic interest rates.

Commercial letters of credit are:

A stronger U.S.dollar generally

In the field of foreign trade, the most common form of credit instrument is the:

Special Drawing Rights are international reserve assets created by the International Monetary Fund that can be drawn upon by member nations.

The manager of the foreign exchange office of a multinational corporation could, in anticipation of a decline in the value of currency of one of its foreign accounts:

Foreign exchange markets may be described as:

The Federal Reserve System:

An order bill of lading is a document given by a transportation company that lists goods to be transported and terms of the shipping agreement.

A stronger U.S.dollar generally

For most of the remainder of the decade after the September 11th terrorist attacks the Fed maintained a high liquidity, low interest rate environment, which was accompanied by:

The Financial Environment

Money and the Monetary System

Banks and Other Financial Institutions

Federal Reserve System

Policy Makers and the Money Supply

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuation

Securities Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters