Question 1

Explain the mechanics of open accounts in international transactions.

Accepted Answer

In a sense,an open account is really an

Question 2

The __________________________ is the primary decision-making body of the WTO.

Accepted Answer

A) General Council 
B) Security Council 
C) General Assembly 
D) Ministerial Conference 
A) General Council 
B) Security Council 
C) General Assembly 
D) Ministerial Conference

Question 3

In a documentary collection transaction,the exporter has an increased risk that is not so prominent in a letter of credit transaction? What is that risk?

Accepted Answer

A) If the importer does not pay for the goods,the exporter will have to take action in the country where the importer is to force the return of the goods. 
B) In a documentary collection transaction,the exporter has had to pay a fee to a bank for the documentary collection that is not required in a letter of credit transaction. 
C) If the importer rejects the goods in a letter of credit transaction,the exporter still receives payment,but if the importer rejects the goods in a documentary collection transaction,the exporter does not get paid. 
D) In a documentary collection,the exporter is depending on the importer to make payment and take title to and possession of the goods.If the importer does not do that,the exporter has an inventory of unsold goods in a foreign country. 
A) If the importer does not pay for the goods,the exporter will have to take action in the country where the importer is to force the return of the goods. 
B) In a documentary collection transaction,the exporter has had to pay a fee to a bank for the documentary collection that is not required in a letter of credit transaction. 
C) If the importer rejects the goods in a letter of credit transaction,the exporter still receives payment,but if the importer rejects the goods in a documentary collection transaction,the exporter does not get paid. 
D) In a documentary collection,the exporter is depending on the importer to make payment and take title to and possession of the goods.If the importer does not do that,the exporter has an inventory of unsold goods in a foreign country.

Question 4

What development in the 1990's diminished the importance of banker's acceptances?

Accepted Answer

A) Export-credit insurance became available and minimized the need for letters of credit. 
B) Import-export banks began to refuse to accept the default risk imposed on them by letters of credit. 
C) Improved wire-transfers of funds eliminated most of the need for letters of credit. 
D) International credit markets replaced letters of credit with derivatives that assumed the risk addressed by letters of credit. 
A) Export-credit insurance became available and minimized the need for letters of credit. 
B) Import-export banks began to refuse to accept the default risk imposed on them by letters of credit. 
C) Improved wire-transfers of funds eliminated most of the need for letters of credit. 
D) International credit markets replaced letters of credit with derivatives that assumed the risk addressed by letters of credit.

Question 5

In evaluating applicants seeking membership in the World Trade Organization,the initial evaluation of the applicant considers:

Accepted Answer

A) the consistency between the applicant's trade policies and the policies of the WTO. 
B) how well-developed the economic system of the applicant is compared to other countries around the world. 
C) the ability of the applicant to contribute its share of the operating costs of the WTO. 
D) the terms of international trade agreements that the applicant has already joined. 
A) the consistency between the applicant's trade policies and the policies of the WTO. 
B) how well-developed the economic system of the applicant is compared to other countries around the world. 
C) the ability of the applicant to contribute its share of the operating costs of the WTO. 
D) the terms of international trade agreements that the applicant has already joined.

Question 6

A prohibited subsidy,in the view of the WTO,is one that:

Accepted Answer

A) gives a domestic firm an advantage in international trade. 
B) imposes serious prejudice on another country. 
C) gives an advantage to domestic industrial research. 
D) distorts international trade. 
A) gives a domestic firm an advantage in international trade. 
B) imposes serious prejudice on another country. 
C) gives an advantage to domestic industrial research. 
D) distorts international trade.

Question 7

Describe the process by which a letter of credit is paid.

Accepted Answer

Once an importer has agreed on a price a

Question 8

What is the difference between a revocable letter of credit and an irrevocable letter of credit?

Accepted Answer

A) A revocable letter of credit can be cancelled at any time by either the importer or the exporter,but an irrevocable letter of credit cannot be cancelled. 
B) A revocable letter of credit can be assigned to anyone,but an irrevocable letter of credit can only be assigned upon the consent of the issuing bank. 
C) The terms of an irrevocable letter of credit cannot be changed without the consent of the beneficiary of the letter of credit. 
D) Since the terms of letters of credit are standardized and apply whatever name is given to a letter of credit,there is no distinction between revocable and irrevocable letters of credit. 
A) A revocable letter of credit can be cancelled at any time by either the importer or the exporter,but an irrevocable letter of credit cannot be cancelled. 
B) A revocable letter of credit can be assigned to anyone,but an irrevocable letter of credit can only be assigned upon the consent of the issuing bank. 
C) The terms of an irrevocable letter of credit cannot be changed without the consent of the beneficiary of the letter of credit. 
D) Since the terms of letters of credit are standardized and apply whatever name is given to a letter of credit,there is no distinction between revocable and irrevocable letters of credit.

Question 9

A documentary credit is so named because:

Accepted Answer

A) it provides a credit that the holder can use like a short-term loan. 
B) the credit that it represents must be documented by the importer before the importer can take advantage of the credit. 
C) it allows partial payment or credit even if all of the required documents are not provided. 
D) the payment it guarantees is conditioned on the receipt of specified documents. 
A) it provides a credit that the holder can use like a short-term loan. 
B) the credit that it represents must be documented by the importer before the importer can take advantage of the credit. 
C) it allows partial payment or credit even if all of the required documents are not provided. 
D) the payment it guarantees is conditioned on the receipt of specified documents.

Question 10

If an exporter provides goods to an importer,but the exporter retains title to those goods until they are sold even though the goods are in the possession of the importer,the transaction is identified as a(n):

Accepted Answer

A) bailment. 
B) consignment. 
C) open account. 
D) installment. 
A) bailment. 
B) consignment. 
C) open account. 
D) installment.

Question 11

The G8 includes seven major nations that are members of the Organization for Economic Co-operation and Development plus:

Accepted Answer

A) Canada. 
B) Japan. 
C) Russia. 
D) Brazil. 
A) Canada. 
B) Japan. 
C) Russia. 
D) Brazil.

Question 12

What are some of the product quality risks that importers face?

Accepted Answer

A) Importers face the risk that imported goods will not be of the quality expected,so,if they have paid for the goods before receipt,they may have a difficult time obtaining replacement goods or recovering the payment that they made. 
B) Importers face the risk that the imported goods will be of a higher quality than domestic goods so that importers will have to charge more for the goods than the price of domestic goods. 
C) Importers do not face product quality risks since importers can specify the required quality of goods in their contracts. 
D) Importers face the risk that the imported goods will be of varying quality so that importers will have to charge different prices for similar goods. 
A) Importers face the risk that imported goods will not be of the quality expected,so,if they have paid for the goods before receipt,they may have a difficult time obtaining replacement goods or recovering the payment that they made. 
B) Importers face the risk that the imported goods will be of a higher quality than domestic goods so that importers will have to charge more for the goods than the price of domestic goods. 
C) Importers do not face product quality risks since importers can specify the required quality of goods in their contracts. 
D) Importers face the risk that the imported goods will be of varying quality so that importers will have to charge different prices for similar goods.

Question 13

A consignment arrangement allows:

Accepted Answer

A) an exporter to reduce the risks that the purchase price of the goods exported will not be paid. 
B) an importer to use its bargaining power to get the lowest price that the exporter can offer. 
C) an importer to acquire goods for immediate resale without increasing inventory risk. 
D) an exporter to avoid the delays that can be experienced in getting foreign goods cleared through customs. 
A) an exporter to reduce the risks that the purchase price of the goods exported will not be paid. 
B) an importer to use its bargaining power to get the lowest price that the exporter can offer. 
C) an importer to acquire goods for immediate resale without increasing inventory risk. 
D) an exporter to avoid the delays that can be experienced in getting foreign goods cleared through customs.

Question 14

How can an exporter use a letter of credit to obtain financing?

Accepted Answer

A) There is an active secondary market for letters of credit,and an exporter can sell a letter of credit on that market. 
B) Since a letter of credit is an assurance of payment of a specific amount in the future,an exporter can accumulate several letters of credit,securitize those letters of credit,and sell interests in the securitized letters of credit. 
C) Since a letter of credit represents only the possibility of future payment,a letter of credit is of no use to an exporter in obtaining financing. 
D) Since a letter of credit represents a future payment to an exporter for goods sold,the exporter can use the letter of credit as collateral for a loan. 
A) There is an active secondary market for letters of credit,and an exporter can sell a letter of credit on that market. 
B) Since a letter of credit is an assurance of payment of a specific amount in the future,an exporter can accumulate several letters of credit,securitize those letters of credit,and sell interests in the securitized letters of credit. 
C) Since a letter of credit represents only the possibility of future payment,a letter of credit is of no use to an exporter in obtaining financing. 
D) Since a letter of credit represents a future payment to an exporter for goods sold,the exporter can use the letter of credit as collateral for a loan.

Question 15

The accounting system that measures transactions between one country and all other countries is called the:

Accepted Answer

A) balance of trade system. 
B) balance of payments system. 
C) balance of current accounts system. 
D) balance of goods and services system. 
A) balance of trade system. 
B) balance of payments system. 
C) balance of current accounts system. 
D) balance of goods and services system.

Question 16

What is a cash cycle?

Accepted Answer

A) The cash cycle identifies the gap between the time a business pays for raw materials and the time that buyer of the goods produced with those raw materials pays the business for those goods. 
B) The cash cycle is the time between the sale of goods and the time that the seller receives payment for the goods. 
C) The cash cycle is the time that it takes a seller on credit to collect the amount of the credit sale. 
D) The cash cycle is the gap between the time that a business borrows money and the time the borrowed funds are completely repaid. 
A) The cash cycle identifies the gap between the time a business pays for raw materials and the time that buyer of the goods produced with those raw materials pays the business for those goods. 
B) The cash cycle is the time between the sale of goods and the time that the seller receives payment for the goods. 
C) The cash cycle is the time that it takes a seller on credit to collect the amount of the credit sale. 
D) The cash cycle is the gap between the time that a business borrows money and the time the borrowed funds are completely repaid.

Question 17

In economic terms,_____________________ occur when the benefit of defaulting on a payment is less than the present value of future benefits in a relationship.

Accepted Answer

A) transactions 
B) barter transactions 
C) open accounts 
D) financing 
A) transactions 
B) barter transactions 
C) open accounts 
D) financing

Question 18

One of the most important post-World War II developments related to trade was the:

Accepted Answer

A) Bretton Woods Agreement. 
B) multilateral reduction of tariffs and non-tariff barriers to trade. 
C) creation of the General Agreement on Tariffs and Trade. 
D) establishment of the North American Free Trade Agreement organization. 
A) Bretton Woods Agreement. 
B) multilateral reduction of tariffs and non-tariff barriers to trade. 
C) creation of the General Agreement on Tariffs and Trade. 
D) establishment of the North American Free Trade Agreement organization.

Question 19

GATT was succeeded in 1995 by the:

Accepted Answer

A) renewal of the General Agreement on Tariffs and Trade. 
B) World Trade Organization. 
C) Uruguay Round. 
D) Dora Round. 
A) renewal of the General Agreement on Tariffs and Trade. 
B) World Trade Organization. 
C) Uruguay Round. 
D) Dora Round.

Question 20

The organization that oversees the international payment system is the:

Accepted Answer

A) World Bank. 
B) International Monetary Fund. 
C) International Center for the Settlement of Investment Disputes. 
D) World Trade organization. 
A) World Bank. 
B) International Monetary Fund. 
C) International Center for the Settlement of Investment Disputes. 
D) World Trade organization.

Explain the mechanics of open accounts in international transactions.

The __________________________ is the primary decision-making body of the WTO.

In a documentary collection transaction,the exporter has an increased risk that is not so prominent in a letter of credit transaction? What is that risk?

What development in the 1990's diminished the importance of banker's acceptances?

In evaluating applicants seeking membership in the World Trade Organization,the initial evaluation of the applicant considers:

A prohibited subsidy,in the view of the WTO,is one that:

Describe the process by which a letter of credit is paid.

What is the difference between a revocable letter of credit and an irrevocable letter of credit?

A documentary credit is so named because:

If an exporter provides goods to an importer,but the exporter retains title to those goods until they are sold even though the goods are in the possession of the importer,the transaction is identified as a(n):

The G8 includes seven major nations that are members of the Organization for Economic Co-operation and Development plus:

What are some of the product quality risks that importers face?

A consignment arrangement allows:

How can an exporter use a letter of credit to obtain financing?

The accounting system that measures transactions between one country and all other countries is called the:

What is a cash cycle?

In economic terms,_____________________ occur when the benefit of defaulting on a payment is less than the present value of future benefits in a relationship.

One of the most important post-World War II developments related to trade was the:

GATT was succeeded in 1995 by the:

The organization that oversees the international payment system is the:

Introduction

International Financial Markets: Structure and Innovation

Currency and Eurocurrency Derivatives

Currency Systems and Valuation

Currency Parity Conditions

Currency Risk Exposure Measurement

Currency Exposure Management

Capital Budgeting

Advanced Capital Budgeting

Long-Term Financing

Optimizing and Financing Working Capital

International Alliances and Acquisitions

International Taxation and Accounting

International Portfolio Investments

Filters

Exam 13: International Trade

Explain the mechanics of open accounts in international transactions.

The __________________________ is the primary decision-making body of the WTO.

In a documentary collection transaction,the exporter has an increased risk that is not so prominent in a letter of credit transaction? What is that risk?

What development in the 1990's diminished the importance of banker's acceptances?

In evaluating applicants seeking membership in the World Trade Organization,the initial evaluation of the applicant considers:

A prohibited subsidy,in the view of the WTO,is one that:

Describe the process by which a letter of credit is paid.

What is the difference between a revocable letter of credit and an irrevocable letter of credit?

A documentary credit is so named because:

If an exporter provides goods to an importer,but the exporter retains title to those goods until they are sold even though the goods are in the possession of the importer,the transaction is identified as a(n):

The G8 includes seven major nations that are members of the Organization for Economic Co-operation and Development plus:

What are some of the product quality risks that importers face?

A consignment arrangement allows:

How can an exporter use a letter of credit to obtain financing?

The accounting system that measures transactions between one country and all other countries is called the:

What is a cash cycle?

In economic terms,_____________________ occur when the benefit of defaulting on a payment is less than the present value of future benefits in a relationship.

One of the most important post-World War II developments related to trade was the:

GATT was succeeded in 1995 by the:

The organization that oversees the international payment system is the:

Introduction

International Financial Markets: Structure and Innovation

Currency and Eurocurrency Derivatives

Currency Systems and Valuation

Currency Parity Conditions

Currency Risk Exposure Measurement

Currency Exposure Management

Capital Budgeting

Advanced Capital Budgeting

Long-Term Financing

Optimizing and Financing Working Capital

International Alliances and Acquisitions

International Taxation and Accounting

International Portfolio Investments

Filters