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| 1.
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Firms that rely on export management companies to handle their foreign sales may fail to develop their own exporting capabilities. |
| | A) | True |
| | B) | False |
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| 2.
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Issued by the importer, the letter of credit represents a promise of payment. |
| | A) | True |
| | B) | False |
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| 3.
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The advantage of the letter of credit system is that importers and exporters are likely to trust reputable banks, even if they do not trust each other. |
| | A) | True |
| | B) | False |
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| 4.
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The Exim Bank is an independent agency of the U.S. government that provides financing aid that facilitates exports, imports, and the exchange of commodities between the U.S. and other countries. |
| | A) | True |
| | B) | False |
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| 5.
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A firm that is unwilling to enter a countertrade agreement may lose an export opportunity to an exporter that is more flexible. |
| | A) | True |
| | B) | False |
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| 6.
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Research shows that _____ firms tend to be proactive about seeking export opportunities. |
| | A) | large |
| | B) | small |
| | C) | medium |
| | D) | all |
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| 7.
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Problems that challenge many new exporters include all of the following except |
| | A) | poor market analysis |
| | B) | a poor understanding of competitive conditions in the foreign market |
| | C) | effective export financing |
| | D) | a lack of a good distribution program |
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| 8.
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Compared to their Japanese and German counterparts, American firms |
| | A) | have better opportunities |
| | B) | have fewer export related resources available |
| | C) | have a greater reliance on exports |
| | D) | are able to access more information sources to facilitate exports |
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| 9.
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Which of the following strategies does not lead to successful exporting? |
| | A) | hiring an EMC to help identify opportunities and navigate the paperwork involved in exporting |
| | B) | entering multiple markets simultaneously |
| | C) | recognizing the time and managerial commitment required to build export sales |
| | D) | building strong relationships with local distributors |
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| 10.
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______ are negotiable instruments that, once accepted, can be sold to an investor at a discount from its face value. |
| | A) | bills of lading |
| | B) | sight drafts |
| | C) | time drafts |
| | D) | letter of credits |
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| 11.
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The ______ is a document used for financing international trade that is issued to the exporter by the common carrier transporting the merchandise. |
| | A) | sight draft |
| | B) | time draft |
| | C) | letter of credit |
| | D) | bill of lading |
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| 12.
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_____ provides coverage against commercial risks and political risks to American firms doing business in foreign markets. |
| | A) | Foreign Credit Insurance Association |
| | B) | Export-Import Bank |
| | C) | Federal Reserve |
| | D) | U.S. Foreign Insurance Agency |
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| 13.
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When conventional means of payment are difficult, costly, or nonexistent, a firm may turn to |
| | A) | a letter of credit |
| | B) | a sight draft |
| | C) | countertrade |
| | D) | cash in advance |
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| 14.
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Barter |
| | A) | is the direct exchange of goods and/or services between two parties without a cash transaction |
| | B) | occurs when a firm agrees to purchase a certain amount of materials back from the country to which a sale is made |
| | C) | involves a specialized third party trading house |
| | D) | occurs when a firm builds a plant in a country and agrees to take a percentage of the plant's output as partial payment for the contract |
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| 15.
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Firms may avoid ______ because if goods are not exchanged simultaneously one partner ends up financing the other for some time period, and because a firm may have to accept goods that they do not want or are difficult to resell. |
| | A) | counterpurchase |
| | B) | switch trading |
| | C) | offset |
| | D) | barter |
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| 16.
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The direct exchange of goods and/or services between two parties without a cash transaction is known as |
| | A) | barter |
| | B) | switch trading |
| | C) | counterpurchase |
| | D) | a buyback |
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| 17.
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Counterpurchase |
| | A) | is the direct exchange of goods and/or services between two parties without a cash transaction |
| | B) | occurs when a firm agrees to purchase a certain amount of materials back from the country to which a sale is made |
| | C) | involves a specialized third party trading house |
| | D) | occurs when a firm builds a plant in a country and agrees to take a percentage of the plant's output as partial payment for the contract |
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| 18.
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If an American company sells its products to Denmark and agrees to use some of the proceeds from the sale to purchase Danish made toys to be sold in the U.S., _____ deal has been made. |
| | A) | an offset |
| | B) | a switch trading |
| | C) | a buyback |
| | D) | a counterpurchase |
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| 19.
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When a firm agrees to purchase a certain amount of materials back from the country to which a sale is made, the arrangement is known as |
| | A) | an offset |
| | B) | a counterpurchase |
| | C) | barter |
| | D) | a buyback |
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| 20.
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______ occurs when a third-party trading house buys a firm's counterpurchase credits and sells them to another firm that can better use them. |
| | A) | barter |
| | B) | compensation |
| | C) | counterpurchase |
| | D) | switch trading |
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| 21.
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A buyback |
| | A) | is the direct exchange of goods and/or services between two parties without a cash transaction |
| | B) | occurs when a firm agrees to purchase a certain amount of materials back from the country to which a sale is made |
| | C) | involves a specialized third party trading house |
| | D) | occurs when a firm builds a plant in a country and agrees to take a percentage of the plant's output as partial payment for the contract |
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| 22.
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_______ is more attractive to exporters than _____ because it gives the exporter greater flexibility to choose the goods that it wishes to purchase. |
| | A) | barter, switch trading |
| | B) | counterpurchase, buybacks |
| | C) | compensation, barter |
| | D) | offset, counterpurchase |
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| 23.
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The main attraction of countertrade is that |
| | A) | it allows the exporter to receive goods rather than cash payments |
| | B) | it avoids trade barriers |
| | C) | it gives a firm a means of financing an export deal when other means are not available |
| | D) | it allows a company to trade goods for services |
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| 24.
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Which of the following is not true of countertrade? |
| | A) | it can take the form of offset, compensation, turnkey, switch trading, and counterpurchase |
| | B) | it can become a strategic marketing weapon |
| | C) | it may be required by a government |
| | D) | it involves the exchange of goods |
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| 25.
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Countertrade is most attractive to |
| | A) | small exporters |
| | B) | exporters that operate in a few, small markets |
| | C) | service firms |
| | D) | large, diverse multinationals |
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