 |
| 1 | |
It is not worth the effort for small business to consider exporting because of the concerns with financing, paperwork, problematic currency exchange issues, political unrest in markets and the mechanics of exporting. |
| | A) | True |
| | B) | False |
|
|
|
| 2 | |
Issued by the importer, the letter of credit represents a promise of payment. |
| | A) | True |
| | B) | False |
|
|
|
| 3 | |
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 |
|
|
|
| 4 | |
The Eximbank 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 |
|
|
|
| 5 | |
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 |
|
|
|
| 6 | |
Research shows that _____ firms tend to be proactive about seeking export opportunities. |
| | A) | large |
| | B) | small |
| | C) | medium |
| | D) | all |
|
|
|
| 7 | |
New exporters are often discouraged after initial attempts for many reason, which include all of the following except |
| | A) | poor market analysis |
| | B) | a poor understanding of competitive conditions in the foreign market |
| | C) | government interference once trade deals have been set |
| | D) | a lack of a good distribution program |
|
|
|
| 8 | |
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 |
|
|
|
| 9 | |
The US government provides support for exporters by providing information through which of the following? |
| | A) | The Treasury Department's Bureau of Currency Transactions |
| | B) | The Small Business Administration's Export Legal Assistance Network |
| | C) | The Commerce Department's International Service Agency |
| | D) | The State Department's Commercial Ventures Agency |
|
|
|
| 10 | |
Export management companies |
| | A) | are generally subsidiaries of large international consulting firms. |
| | B) | are often used by large businesses but are not cost-effective for small firms. |
| | C) | can help firms launch their own export departments or accept continuing responsibility for exporting operations. |
| | D) | have uniformly high standards since they are licensed by the US Department of Commerce if they wish to business in the United States. |
|
|
|
| 11 | |
Hiring an EMC, focusing on a few markets, entering on a small scale, devoting the time and resources for the long term, and working with locals in the target markets are all strategies that can be used to _____________________. |
| | A) | make sure foreign direct investment will be successful. |
| | B) | avoid potential conflicts with the WTO. |
| | C) | reduce the paperwork burden in exporting. |
| | D) | reduce the risks in exporting. |
|
|
|
| 12 | |
Firms engaged in international trade must often work with businesspeople from other countries they do not know, who may not speak a common language, who may use a different legal system and who may be difficult to reach for any number of reasons. These factors contribute to a fundamental lack of trust that has: |
| | A) | contributed to international tensions that have frequently erupted into armed conflict. |
| | B) | given rise to commercial intermediaries and systems that facilitate who can profit from working with parties who do not trust each other. |
| | C) | caused many small firms to go out of business. |
| | D) | overshadowed any benefits small firms might have in exporting. |
|
|
|
| 13 | |
All of the following are true about letters of credit except: |
| | A) | Letters of credit are offered at no cost to regular customers of banks with established international departments. |
| | B) | One advantage is that importers and exporters are more likely to trust their banks than each other, so the banks are used to handle arrangements. |
| | C) | Letters of credit can help improve the cash flow of both importers and exporters. |
| | D) | Letters of credit are issued by a bank at the request of an importer. |
|
|
|
| 14 | |
A draft is an order written by an exporter instructing an importer or an importer's agent to pay a specified amount of money. A ___________ is payable on presentation to the drawee. |
| | A) | spot rate draft |
| | B) | sight draft |
| | C) | immediate draft |
| | D) | current draft |
|
|
|
| 15 | |
______ 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) | letters of credit |
|
|
|
| 16 | |
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 |
|
|
|
| 17 | |
The typical international trade transaction using a letter of credit has fourteen steps. Which of the following is not true about the transaction? |
| | A) | After the exporter ships the agreed to merchandise, there is no further direct contact between the importer and exporter in the process. |
| | B) | One advantage of the process is the speed, since most transactions are completed in 60 days after the order is placed. |
| | C) | Banks rely on paperwork rather than taking custody of the goods. |
| | D) | Most of the steps involve the banks. |
|
|
|
| 18 | |
_____ 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 |
|
|
|
| 19 | |
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 |
|
|
|
| 20 | |
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 |
|
|
|
| 21 | |
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 |
|
|
|
| 22 | |
A(n) ______ is different from a counterpurchase in that the party can fulfill the obligation with any firm in the country to which the sale is being made. |
| | A) | switch trade |
| | B) | offset |
| | C) | country-buy |
| | D) | broad-based sale |
|
|
|
| 23 | |
Switch trading |
| | A) | is a relatively modern development that began with importing and exporting of electronic components. |
| | B) | involves a specialized third party. |
| | C) | is preferred when an exporter has excess profits he or she wants to shelter from tariffs and similar duties. |
| | D) | is an expensive alternative and is avoided by serious exporters. |
|
|
|
| 24 | |
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 |
|
|
|
| 25 | |
Countertrade is most attractive to |
| | A) | small exporters |
| | B) | exporters that operate in a few, small markets |
| | C) | service firms |
| | D) | large, diverse multinationals |
|
|
.