Global Business Chapter 16 Quiz

Which of the following refers to an order written by an exporter instructing an importer, or an importer's agent, to pay a specified amount of money at a specified time?

Bill of exchange

A letter of credit awards the title of a product or service to the issuing bank.

False

The Export-Import Bank is an agency of the United Nations and its mission is promoting global trade.

False

The main principle of countertrade is to accept advance payments for goods and services that are exported to another country.

False

Export credit insurance is provided by the _____, an association of private commercial institutions operating under the guidance of the Export-Import Bank.

Foreign Credit Insurance Association (FCIA)

Which of the following is a factor that determines the bank charges on a letter of credit?

Importer's creditworthiness

Which of the following is a valid observation of the Export-Import (Ex-Im) Bank?

It is an independent agency of the U.S government and promotes international trade.

Identify a common difficulty that traders face when exporting goods or services to other countries.

Many customers require face-to-face negotiations on their home turf.

Which of the following is true of many novice exporters?

Novice exporters often have a poor understanding of competitive conditions in the foreign market.

Which of the following is the main objective of the SCORE program administered by the SBA?

Providing one-on-one counseling to active and new-to-export businesses.

A drawback of relying on an export management company is that a company can fail to develop its own exporting capabilities.

True

A sight draft is payable on presentation to the drawee.

True

One big impediment to exporting is the simple lack of knowledge about the opportunities available in other countries.

True

Switch trading refers to the use of a specialized third-party trading house in a countertrade agreement.

True

A counter purchase occurs when

a firm agrees to buy a certain amount of materials back from a country to which a sale is made.

A(n) _____ occurs when a firm builds a plant in a country and agrees to take a certain percentage of the plant's output as partial payment for the contract.

buyback

Barter refers to the

direct exchange of goods or services without a cash transaction.

As a contract, the bill of lading specifies that the carrier

is obligated to provide a transportation service in return for a certain charge.

A letter of credit is a document

issued by a bank at the request of an importer.

A major advantage of countertrade is that

it helps firms finance export deals when there are no other means.