Question 1

Which of the following firms would find a factor most useful?

Accepted Answer

A) Levi Strauss,which has been shipping jeans to the same customers in 120 countries for over 40 years, 
B) Brown and Root,which manages major construction projects around the world 
C) RC Cola,which periodically ships a small order of soft drinks overseas 
D) IBM,which exports mainframes and other expensive equipment to customers in over 100 countries around the world 
A) Levi Strauss,which has been shipping jeans to the same customers in 120 countries for over 40 years, 
B) Brown and Root,which manages major construction projects around the world 
C) RC Cola,which periodically ships a small order of soft drinks overseas 
D) IBM,which exports mainframes and other expensive equipment to customers in over 100 countries around the world C

Question 2

Why is Ex-im Bank financing often referred to as financing of "last resort?"

Accepted Answer

A) it will not provide financing unless the U.S.exporter is doing business in more than one country 
B) it will not provide financing unless private capital is unavailable 
C) fees are extremely high for guarantees and insurance 
D) the Ex-Im Bank authorizes loans for only the worst credit risks 
A) it will not provide financing unless the U.S.exporter is doing business in more than one country 
B) it will not provide financing unless private capital is unavailable 
C) fees are extremely high for guarantees and insurance 
D) the Ex-Im Bank authorizes loans for only the worst credit risks B

Question 3

Countertrade transactions will most probably take the form of

Accepted Answer

A) barter or buyback 
B) credit card purchases 
C) cash in advance 
D) open account terms 
A) barter or buyback 
B) credit card purchases 
C) cash in advance 
D) open account terms A

Question 4

Of all shipping documents,which of the following is the most important?

Accepted Answer

A) bill of lading 
B) insurance certificate 
C) commercial invoice 
D) consular invoice 
A) bill of lading 
B) insurance certificate 
C) commercial invoice 
D) consular invoice

Question 5

Precor sells exercise equipment to thousands of health clubs and sporting goods stores around the world.Its average order size is about $3,500.Which of the following techniques would you recommend to Precor to deal with its credit risk?

Accepted Answer

A) insure the receivables through the FCIA,which will charge a 1.2% fee to cover 90% of the receivables 
B) use a factor,who will charge a 1.3% export factoring fee 
C) request letters of credit from customers.The customers will have to pay $75 plus 0.5% for each letter of credit.To remain competitive,Precor will have to reduce its prices to reimburse customers for their L/C costs 
D) all are about equally acceptable 
A) insure the receivables through the FCIA,which will charge a 1.2% fee to cover 90% of the receivables 
B) use a factor,who will charge a 1.3% export factoring fee 
C) request letters of credit from customers.The customers will have to pay $75 plus 0.5% for each letter of credit.To remain competitive,Precor will have to reduce its prices to reimburse customers for their L/C costs 
D) all are about equally acceptable

Question 6

Which of the following is the most important advantage of letter of credit financing?

Accepted Answer

A) it eliminates credit risk 
B) it reduces the danger that payment will be delayed 
C) it facilitates financing 
D) it reduces the uncertainty that the exporter and importer will not perform according to their agreement 
A) it eliminates credit risk 
B) it reduces the danger that payment will be delayed 
C) it facilitates financing 
D) it reduces the uncertainty that the exporter and importer will not perform according to their agreement

Question 7

An exporter shipping goods to a nation that may impose currency controls will seek an L/C that is

Accepted Answer

A) revocable 
B) clean 
C) documentary 
D) confirmed by a domestic bank 
A) revocable 
B) clean 
C) documentary 
D) confirmed by a domestic bank

Question 8

Suppose the Fluor Corporation is seeking to bid on a construction project in Turkey.Which Eximbank program will be most useful to Fluor?

Accepted Answer

A) "standby" loan commitment 
B) Eximbank payment guarantee 
C) preliminary commitment 
D) Eximbank loan guarantee 
A) "standby" loan commitment 
B) Eximbank payment guarantee 
C) preliminary commitment 
D) Eximbank loan guarantee

Question 9

An exporter manufacturing a specialized piece of equipment can hedge the risk that its customer will cancel the contract before shipment by obtaining a

Accepted Answer

A) consignment contract 
B) open account 
C) bill of lading 
D) letter of credit 
A) consignment contract 
B) open account 
C) bill of lading 
D) letter of credit

Question 10

The document in international trade that contains an authoritative description of the merchandise shipped,including the full details on quality,grades,price per unit,and total value stated in a currency is known as the

Accepted Answer

A) bill of lading 
B) commercial invoice 
C) insurance certificate 
D) consular invoice 
A) bill of lading 
B) commercial invoice 
C) insurance certificate 
D) consular invoice

Question 11

Caterpillar Tractor sells heavy construction equipment to a Polish firm.In return,the Polish firm issues a promissory note to Caterpillar promising to pay for the equipment over a five-year period.Caterpillar sells the note to Deutsche Bank at a discount.Caterpillar has used

Accepted Answer

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

Question 12

Eximbank has recently become more aggressive in fighting perceived abuses by foreign export-credit agencies.One area that Eximbank has targeted is

Accepted Answer

A) foreign mixed-credit financing 
B) inexpensive political risk insurance 
C) inexpensive credit risk insurance 
D) preliminary commitments 
A) foreign mixed-credit financing 
B) inexpensive political risk insurance 
C) inexpensive credit risk insurance 
D) preliminary commitments

Question 13

Which of the following functions does a draft NOT perform?

Accepted Answer

A) to provide written evidence,in clear and simple terms,of a financial obligation 
B) to enable both parties to potentially reduce their costs of financing 
C) to provide a negotiable and unconditional instrument 
D) to offer the exporter greater safeguards than a letter of credit in securing repayment from the importer 
A) to provide written evidence,in clear and simple terms,of a financial obligation 
B) to enable both parties to potentially reduce their costs of financing 
C) to provide a negotiable and unconditional instrument 
D) to offer the exporter greater safeguards than a letter of credit in securing repayment from the importer

Question 14

Which one of the following countries has the reputation for the greatest length of time for companies to collect on the average bill?

Accepted Answer

A) Iran 
B) India 
C) Taiwan 
D) Germany 
A) Iran 
B) India 
C) Taiwan 
D) Germany

Question 15

Microsoft sells software to a French firm.In return,the French firm's bank,Credit Agricole,acknowledges it will pay Microsoft after the software is delivered to its client.Microsoft has most probably used

Accepted Answer

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

Question 16

The party to a draft who signs and sends the draft to the second party is called the

Accepted Answer

A) drawer 
B) payee 
C) drawee 
D) broker 
A) drawer 
B) payee 
C) drawee 
D) broker

Question 17

Which of the following is NOT an important attribute of a bankers' acceptance?

Accepted Answer

A) makes an unconditional promise to pay the holder of the draft a stated amount on a specified day 
B) effectively substitutes its own credit for that of a borrower 
C) creates a negotiable instrument that may be freely traded 
D) offers the holder a binding agreement to repayment by the exporter if the importer defaults 
A) makes an unconditional promise to pay the holder of the draft a stated amount on a specified day 
B) effectively substitutes its own credit for that of a borrower 
C) creates a negotiable instrument that may be freely traded 
D) offers the holder a binding agreement to repayment by the exporter if the importer defaults

Question 18

Which one of the following is an advantage to open account financing?

Accepted Answer

A) high risk 
B) seller must finance production 
C) increased risk from currency controls 
D) no customer resistance 
A) high risk 
B) seller must finance production 
C) increased risk from currency controls 
D) no customer resistance

Question 19

The document in international trade that may be required by governments is usually presented to the local consul in exchange for a visa.It is called a

Accepted Answer

A) bill of lading 
B) commercial invoice 
C) insurance certificate 
D) consular invoice 
A) bill of lading 
B) commercial invoice 
C) insurance certificate 
D) consular invoice

Question 20

Which of the following is NOT an advantage to the exporter of L/C financing?

Accepted Answer

A) an L/C eliminates credit risk if the bank that opens it is of undoubted standing 
B) an L/C reduces the danger that payment will be delayed or withheld due to exchange controls or other political acts 
C) payment is only in compliance with the L/C's stipulated conditions 
D) an L/C guards against pre-shipment risks 
A) an L/C eliminates credit risk if the bank that opens it is of undoubted standing 
B) an L/C reduces the danger that payment will be delayed or withheld due to exchange controls or other political acts 
C) payment is only in compliance with the L/C's stipulated conditions 
D) an L/C guards against pre-shipment risks

Which of the following firms would find a factor most useful?

Why is Ex-im Bank financing often referred to as financing of "last resort?"

Countertrade transactions will most probably take the form of

Of all shipping documents,which of the following is the most important?

Precor sells exercise equipment to thousands of health clubs and sporting goods stores around the world.Its average order size is about $3,500.Which of the following techniques would you recommend to Precor to deal with its credit risk?

Which of the following is the most important advantage of letter of credit financing?

An exporter shipping goods to a nation that may impose currency controls will seek an L/C that is

Suppose the Fluor Corporation is seeking to bid on a construction project in Turkey.Which Eximbank program will be most useful to Fluor?

An exporter manufacturing a specialized piece of equipment can hedge the risk that its customer will cancel the contract before shipment by obtaining a

The document in international trade that contains an authoritative description of the merchandise shipped,including the full details on quality,grades,price per unit,and total value stated in a currency is known as the

Caterpillar Tractor sells heavy construction equipment to a Polish firm.In return,the Polish firm issues a promissory note to Caterpillar promising to pay for the equipment over a five-year period.Caterpillar sells the note to Deutsche Bank at a discount.Caterpillar has used

Eximbank has recently become more aggressive in fighting perceived abuses by foreign export-credit agencies.One area that Eximbank has targeted is

Which of the following functions does a draft NOT perform?

Which one of the following countries has the reputation for the greatest length of time for companies to collect on the average bill?

Microsoft sells software to a French firm.In return,the French firm's bank,Credit Agricole,acknowledges it will pay Microsoft after the software is delivered to its client.Microsoft has most probably used

The party to a draft who signs and sends the draft to the second party is called the

Which of the following is NOT an important attribute of a bankers' acceptance?

Which one of the following is an advantage to open account financing?

The document in international trade that may be required by governments is usually presented to the local consul in exchange for a visa.It is called a

Which of the following is NOT an advantage to the exporter of L/C financing?

Introduction

The Determination of Exchange Rates

The International Monetary System

Parity Conditions in International Finance and Currency Forecasting

The Balance of Payments and International Economic Linkages

Country Risk Analysis

The Foreign Exchange Market

Currency Futures and Options Markets

Swaps and Interest Rate Derivatives

Measuring and Managing Translation and Transaction Exposure

Measuring and Managing Economic Exposure

International Financing and National Capital Markets

Functions of Euromarkets

The Cost of Capital for Foreign Investments

Examining International Portfolio Investing

Corporate Strategy and Foreign Direct Investment

Capital Budgeting for the Multinational Corporation

Current Asset Management and Short-Term Financing

Managing the Multinational Financial System

Filters

Exam 18: Financing Foreign Trade

Which of the following firms would find a factor most useful?

Why is Ex-im Bank financing often referred to as financing of "last resort?"

Countertrade transactions will most probably take the form of

Of all shipping documents,which of the following is the most important?

Precor sells exercise equipment to thousands of health clubs and sporting goods stores around the world.Its average order size is about $3,500.Which of the following techniques would you recommend to Precor to deal with its credit risk?

Which of the following is the most important advantage of letter of credit financing?

An exporter shipping goods to a nation that may impose currency controls will seek an L/C that is

Suppose the Fluor Corporation is seeking to bid on a construction project in Turkey.Which Eximbank program will be most useful to Fluor?

An exporter manufacturing a specialized piece of equipment can hedge the risk that its customer will cancel the contract before shipment by obtaining a

The document in international trade that contains an authoritative description of the merchandise shipped,including the full details on quality,grades,price per unit,and total value stated in a currency is known as the

Caterpillar Tractor sells heavy construction equipment to a Polish firm.In return,the Polish firm issues a promissory note to Caterpillar promising to pay for the equipment over a five-year period.Caterpillar sells the note to Deutsche Bank at a discount.Caterpillar has used

Eximbank has recently become more aggressive in fighting perceived abuses by foreign export-credit agencies.One area that Eximbank has targeted is

Which of the following functions does a draft NOT perform?

Which one of the following countries has the reputation for the greatest length of time for companies to collect on the average bill?

Microsoft sells software to a French firm.In return,the French firm's bank,Credit Agricole,acknowledges it will pay Microsoft after the software is delivered to its client.Microsoft has most probably used

The party to a draft who signs and sends the draft to the second party is called the

Which of the following is NOT an important attribute of a bankers' acceptance?

Which one of the following is an advantage to open account financing?

The document in international trade that may be required by governments is usually presented to the local consul in exchange for a visa.It is called a

Which of the following is NOT an advantage to the exporter of L/C financing?

Introduction

The Determination of Exchange Rates

The International Monetary System

Parity Conditions in International Finance and Currency Forecasting

The Balance of Payments and International Economic Linkages

Country Risk Analysis

The Foreign Exchange Market

Currency Futures and Options Markets

Swaps and Interest Rate Derivatives

Measuring and Managing Translation and Transaction Exposure

Measuring and Managing Economic Exposure

International Financing and National Capital Markets

Functions of Euromarkets

The Cost of Capital for Foreign Investments

Examining International Portfolio Investing

Corporate Strategy and Foreign Direct Investment

Capital Budgeting for the Multinational Corporation

Current Asset Management and Short-Term Financing

Managing the Multinational Financial System

Filters