QUESTION Which of the following is the first step in a typical international trade transaction? A. The exporter agrees to ship under a letter of credit and specifies relevant information such as prices and delivery terms. B. The importer applies to a trusted third party (usually a bank) for a letter of credit to be […]
QUESTION Which of the following is true of counterpurchase? A. It is the most restrictive countertrade arrangement. B. It is a reciprocal buying agreement. C. It is the simplest countertrade arrangement. D. It uses a specialized third-party trading house. E. It is the direct exchange of goods without a cash transaction. ANSWER B
QUESTION When a bill of lading is used to obtain payment or a written promise of payment before the merchandise is released to the importer, it serves as a: A. document of title. B. contract. C. receipt. D. time draft. E. collateral. ANSWER A
QUESTION The Foreign Credit Insurance Association (FCIA) is an association of private commercial institutions operating under the guidance of the: A. Federal Mediation and Conciliation Service. B. U.S. Department of Commerce. C. Export-Import Bank. D. International Trade Administration. E. Ministry of International Trade and Industry. ANSWER C
QUESTION In the United States, export credit insurance is provided by the: A. Export-Import Bank. B. Bank of New York. C. Foreign Credit Insurance Association. D. Federal Deposit Insurance Corporation. E. Federal Reserve Bank. ANSWER C
QUESTION An export credit insurance is necessary when the exporter: A. is exposed to the risk that the importer may default on payment. B. is dealing in a country that has a nonconvertible currency. C. is unable to obtain any pre-export financing. D. has received a letter of credit from the importer’s bank. E. has […]
QUESTION Countertrade is most likely to be used when: A. the foreign currency is easily convertible. B. the exporter has a letter of credit. C. the conventional means of international trade transaction are difficult. D. there is mutual trust between the exporter and the importer. E. an export management company is used. ANSWER C
QUESTION An exporter has to forgo a letter of credit when: A. competing exporters also require letters of credit. B. the importer is facing stiff competition from other importers. C. the exporter is a dominant player in a noncompetitive market. D. the importer is in a strong bargaining position. E. he or she knows that […]
QUESTION Countertrade occurs when the: A. exporter may not be paid in his or her home currency due to nonconvertibility. B. exporter can convert the currency only in U.S. dollars. C. exporter is dealing with a country that has huge foreign reserves. D. exporter has easy access to export credit to fund its international trade. […]
QUESTION Which of the following is true of countertrade? A. The governments of developing nations sometimes insist on a certain amount of countertrade. B. Countertrade is a means of structuring an international sale when conventional means of payment are cost-effective. C. Nonconvertibility is an advantage for exporters. D. Nonconvertibility implies that the exporter will be […]
