Question 1

The interest rate the bank charges the customer in a banker's acceptance is referred to as the all-in rate; it entirely consists of the acceptance commission.

Accepted Answer

A) True 
 B)False

Question 2

Countertrade represents foreign trade:

Accepted Answer

A)  restrictions imposed by the government on imports from another country. 
B)  restrictions imposed by the government on exports sent from the country. 
C)  transactions that force the sales of goods of one country to be linked to the purchase or exchange of goods from the country. 
D)  financing provided to an exporter in exchange for goods provided to the creditor by the exporter. 
A)  restrictions imposed by the government on imports from another country. 
B)  restrictions imposed by the government on exports sent from the country. 
C)  transactions that force the sales of goods of one country to be linked to the purchase or exchange of goods from the country. 
D)  financing provided to an exporter in exchange for goods provided to the creditor by the exporter.

Question 3

A bank issuing a letter of credit on behalf of an importer is obligated to honor the letter of credit regardless of the buyer's willingness or ability to pay.

Accepted Answer

A) True 
 B)False

Question 4

Consider an exporter that is willing to send goods to the importer without a guaranteed payment by the bank. The bank provides a loan to the exporter that is backed by the value of the exported goods. This reflects:

Accepted Answer

A)  accounts receivable financing. 
B)  forfaiting. 
C)  factoring. 
D)  a letter of credit. 
A)  accounts receivable financing. 
B)  forfaiting. 
C)  factoring. 
D)  a letter of credit.

Question 5

The ____ is a private corporation owned by a consortium of commercial banks and industrial companies, but the ____ is a self-sustaining government agency.

Accepted Answer

A)  Overseas Private Investment Corporation (OPI
C) ; Private Export Funding Corporation (PEFCO) 
B)  Private Export Funding Corporation (PEFCO); Overseas Private Investment Corporation (OPI
C)  
C)  Private Export Funding Corporation (PEFCO); Ex-Imbank 
D)  Overseas Private Investment Corporation (OPI
C) ; Ex-Imbank 
A)  Overseas Private Investment Corporation (OPI
C) ; Private Export Funding Corporation (PEFCO) 
B)  Private Export Funding Corporation (PEFCO); Overseas Private Investment Corporation (OPI
C)  
C)  Private Export Funding Corporation (PEFCO); Ex-Imbank 
D)  Overseas Private Investment Corporation (OPI
C) ; Ex-Imbank

Question 6

Under a ____, the exporter is paid once shipment has been made and the draft is presented to the buyer for payment; under a ____, the exporter provides instructions to the buyer's bank to release shipping documents against acceptance, by the buyer, of the draft.

Accepted Answer

A)  sight draft; time draft 
B)  sight draft; banker's acceptance 
C)  bill of lading; banker's acceptance 
D)  time draft; sight draft 
A)  sight draft; time draft 
B)  sight draft; banker's acceptance 
C)  bill of lading; banker's acceptance 
D)  time draft; sight draft

Question 7

When using factoring to finance international trade, a bank will provide a loan to the exporter secured by an assignment of the account receivable.

Accepted Answer

A) True 
 B)False

Question 8

Consider an importer that issues a promissory note to pay for the imported capital goods over a period of five years. The notes are extended to an exporter who sells them at a discount to a bank. This reflects:

Accepted Answer

A)  accounts receivable financing. 
B)  forfaiting. 
C)  factoring. 
D)  a letter of credit. 
A)  accounts receivable financing. 
B)  forfaiting. 
C)  factoring. 
D)  a letter of credit.

Question 9

Which of the following is not a trade financing method used in international trade from an exporter's perspective?

Accepted Answer

A)  Accounts receivable financing 
B)  Letter of credit 
C)  Barter 
D)  Open account 
A)  Accounts receivable financing 
B)  Letter of credit 
C)  Barter 
D)  Open account

Question 10

Which of the following is not true regarding letters of credit?

Accepted Answer

A)  They are issued by banks on behalf of the importer promising to pay the exporter. 
B)  A revocable letter of credit can be cancelled or revoked at any time without prior notification to the beneficiary. 
C)  They guarantee that the goods shipped are the goods purchased. 
D)  All of the above are true. 
A)  They are issued by banks on behalf of the importer promising to pay the exporter. 
B)  A revocable letter of credit can be cancelled or revoked at any time without prior notification to the beneficiary. 
C)  They guarantee that the goods shipped are the goods purchased. 
D)  All of the above are true.

Question 11

An irrevocable L/C obligates the issuing bank to honor all drawings presented in conformity with the terms of the L/C.

Accepted Answer

A) True 
 B)False

Question 12

The risk to the exporter is highest with the ____ method.

Accepted Answer

A)  prepayment 
B)  letter of credit 
C)  consignment 
D)  open account 
A)  prepayment 
B)  letter of credit 
C)  consignment 
D)  open account

Question 13

An exchange of goods between two parties under two distinct contracts expressed in monetary terms is:

Accepted Answer

A)  compensation. 
B)  counterpurchase. 
C)  factoring. 
D)  accounts receivable financing. 
A)  compensation. 
B)  counterpurchase. 
C)  factoring. 
D)  accounts receivable financing.

The interest rate the bank charges the customer in a banker's acceptance is referred to as the all-in rate; it entirely consists of the acceptance commission.

Countertrade represents foreign trade:

A bank issuing a letter of credit on behalf of an importer is obligated to honor the letter of credit regardless of the buyer's willingness or ability to pay.

Consider an exporter that is willing to send goods to the importer without a guaranteed payment by the bank. The bank provides a loan to the exporter that is backed by the value of the exported goods. This reflects:

The is a private corporation owned by a consortium of commercial banks and industrial companies, but the is a self-sustaining government agency.

Under a , the exporter is paid once shipment has been made and the draft is presented to the buyer for payment; under a , the exporter provides instructions to the buyer's bank to release shipping documents against acceptance, by the buyer, of the draft.

When using factoring to finance international trade, a bank will provide a loan to the exporter secured by an assignment of the account receivable.

Consider an importer that issues a promissory note to pay for the imported capital goods over a period of five years. The notes are extended to an exporter who sells them at a discount to a bank. This reflects:

Which of the following is not a trade financing method used in international trade from an exporter's perspective?

Which of the following is not true regarding letters of credit?

An irrevocable L/C obligates the issuing bank to honor all drawings presented in conformity with the terms of the L/C.

The risk to the exporter is highest with the ____ method.

An exchange of goods between two parties under two distinct contracts expressed in monetary terms is:

Multinational Financial Management: An Overview

International Flow of Funds

International Financial Markets

Exchange Rate Determination

Currency Derivatives

Government Influence on Exchange Rates

International Arbitrage and Interest Rate Parity

Relationships among Inflation, Interest Rates, and Exchange Rates

Forecasting Exchange Rates

Measuring Exposure to Exchange Rate Fluctuations

Managing Transaction Exposure

Managing Economic Exposure and Translation Exposure

Direct Foreign Investment

Multinational Capital Budgeting

International Corporate Governance and Control

Country Risk Analysis

Multinational Cost of Capital and Capital Structure

Long-Term Debt Financing

Short-Term Financing

International Cash Management

Filters

Exam 19: Financing International Trade

The interest rate the bank charges the customer in a banker's acceptance is referred to as the all-in rate; it entirely consists of the acceptance commission.

Countertrade represents foreign trade:

A bank issuing a letter of credit on behalf of an importer is obligated to honor the letter of credit regardless of the buyer's willingness or ability to pay.

Consider an exporter that is willing to send goods to the importer without a guaranteed payment by the bank. The bank provides a loan to the exporter that is backed by the value of the exported goods. This reflects:

The ____ is a private corporation owned by a consortium of commercial banks and industrial companies, but the ____ is a self-sustaining government agency.

Under a ____, the exporter is paid once shipment has been made and the draft is presented to the buyer for payment; under a ____, the exporter provides instructions to the buyer's bank to release shipping documents against acceptance, by the buyer, of the draft.

When using factoring to finance international trade, a bank will provide a loan to the exporter secured by an assignment of the account receivable.

Consider an importer that issues a promissory note to pay for the imported capital goods over a period of five years. The notes are extended to an exporter who sells them at a discount to a bank. This reflects:

Which of the following is not a trade financing method used in international trade from an exporter's perspective?

Which of the following is not true regarding letters of credit?

An irrevocable L/C obligates the issuing bank to honor all drawings presented in conformity with the terms of the L/C.

The risk to the exporter is highest with the ____ method.

An exchange of goods between two parties under two distinct contracts expressed in monetary terms is:

Multinational Financial Management: An Overview

International Flow of Funds

International Financial Markets

Exchange Rate Determination

Currency Derivatives

Government Influence on Exchange Rates

International Arbitrage and Interest Rate Parity

Relationships among Inflation, Interest Rates, and Exchange Rates

Forecasting Exchange Rates

Measuring Exposure to Exchange Rate Fluctuations

Managing Transaction Exposure

Managing Economic Exposure and Translation Exposure

Direct Foreign Investment

Multinational Capital Budgeting

International Corporate Governance and Control

Country Risk Analysis

Multinational Cost of Capital and Capital Structure

Long-Term Debt Financing

Short-Term Financing

International Cash Management

Filters

The is a private corporation owned by a consortium of commercial banks and industrial companies, but the is a self-sustaining government agency.

Under a , the exporter is paid once shipment has been made and the draft is presented to the buyer for payment; under a , the exporter provides instructions to the buyer's bank to release shipping documents against acceptance, by the buyer, of the draft.