CBA 396 ch. 16
Draft
A ____ is simply an order written by an exporter instructing an importer or an importers agent to pay a specified amount of money at a specified time Letter of credit Bill of lading Draft Bankers letter
Draft
A ______ is the instrument normally used in international commerce to effect payment Bill of lading Letter of credit Draft Countertrade
Sight draft
A _____is payable on presentation to the drawee bill of lading time draft sight draft letter of credit
Is a time draft that has been drawn in and accepted by a bank
A bankers acceptance Is payable to the drawee immediately on presentation in a bank Is a time draft that has been drawn in and accepted by a bank Is a sight draft that can be used as a negotiable instrument in banks Allows a buyer possession of the merchandise without signing any formal documents
Is a document requesting payment
A draft used in international transactions is a document requesting payment explained the conditions of a contract is the same as a letter of credit gives a bank guarantee to an exporter
Time draft
A______ allows for a delay in payment Bill of lading time draft sight draft letter of credit
Bill of lading
A_________ serves as a receipt, a contract, and a document of title letter of credit bill of lading draft bill of exchange
Bill of lading
As a document of title, a ________can be used to obtain payment or a written promise of payment before the merchandise is released to the importer bill of lading letter of credit bill of exchange draft
is obtained the merchandise described on the face of the document
As a receipt, the bill of lading indicates that the carrier provides a written promise a payment before leasing the merchandise has obtained the merchandise described on the face of the document received payment from a third-party such as a bank or trading house is obligated to provide a transportation service in return for certain charge
Size of the transaction
Bank charges on letters of credit will depend on the exporters credit worthiness size of the transaction exporters means of finance time taken to approve the sale
Soviet Union and the then-communist states of Eastern Europe
Countertrade emerged in the 1960s as a way for the _____ to purchase imports United States European Union ASEAN countries Soviet Union and the then-communist states of Eastern Europe
Most attractive to large diverse multinational enterprises
Countertrade is most attracted to small primarily domestic enterprises least attractive to small primarily domestic enterprises most attractive to large diverse multinational enterprises least attractive to large diverse multinational enterprises
A reputable bank
Firms commonly employed _______as a third-party in international transactions a reputable bank a stock exchange an export management company a customs broker
An offset
In _____ one party agrees to purchase goods and services with a specified percentage of the proceeds from the original sale, and this party can fullfill the obligation with any firm in the country to which the sale is being made A switch trade An offset A barter A buyback
Before product shipment
In a letter of credit transaction, the imported secures the letter of credit Before product shipment After product shipment From the exporters bank After receiving the product
Importers back send a letter of credit to the exporters bank
In a typical international trade transaction, the Exporter should obtain a letter of credit to initiate transactions importer and exporter maintain an account with the same bank Importers bank sends a letter of credit to the exporters bank Importers bank send the draft and bill of lading to the exporters bank
matchmaker
In the ______ program organized by the U.S. Department of a commerce, department representatives accompany groups of US business people abroad to meet with qualified agents, distributors, and customers Best prospects SCORE capital assistance Matchmaker
Experience specialist who can help the neophyte exporter
In theory the advantage of export management companies is that they are managed by governments that provide export subsidies not-for-profit organizations that provide free service subsidized by the department of commerce experience specialist who can help the neophyte exporter
Sogo Shosha
Japan's ______have offices all over the world and they proactively continuously seek export opportunities for their affiliated companies large and small Sogo shosha Kaizen MITI Samurai
Provides finance to facilitate cross-border trade between the United States and other countries
The Export-Import bank Is an international financial institution that provides loans for capital programs Provides finance to facilitate cross-border trade between the United States and other countries Is an independent agency of the United States Focuses on policies that have an impact on the exchange rate and the balance of payments
Bill of lading
The ________is issues to the exporter by the common carrier transporting the merchandise bill of lading sight draft letter of credit time draft
Bill of lading
The exporter endorses the _______ so title to the goods is transferred to the bank Bill of lading Letter of credit Draft Promissory not
Large revenue opportunities are often found in foreign markets
The great promise of exporting is that large revenue opportunities are often found in foreign markets it provides more opportunities to smaller firms than larger firms international trade is protected against exchange risks it reduces the need for insuring businesses against political risks
A counter trade
The main attraction of _______is that it can give a firm a way to finance an export deal when there are no other means available A counter trade a buyback a counter purchase an offset
Maker
The person or business initiating a draft is known as the beneficiary drawee maker trustee
False
True or false A letter of credit states than exporter hav availed credit from the bank to manufacture goods
False
True or false A letter of credit states that an exporter has availed credit from the bank to manufacture goods
True
True or false An export packet can advise companies who are unfamiliar with exporting an appropriate design and materials for the packaging of their items
True
True or false Nearly every state in the United States maintains an active trade commission to promote exports
False
True or false The Japanese sogo shosha have offices all over Japan and companies wishing to trade with Japan must go through them
True
True or false The bank promises to pay on behalf of the importer when a bank is used as a third party in international transactions
False
True or false The bill of lading does not serve as a document of title as such
True
True or false The most comprehensive sources of information for the US firms on exporting opportunities is the US Department of Commerce
True
True or false Ex-Im bank has a direct lending operation under which it lends dollars to foreign borrowers
False
True or false a counter purchase gives exporters more flexibility than an offset
True
True or false a draft is an order written by an exporter instructing an imported to pay a specified amount of money at a specified time
False
True or false a letter of credit states that an exporter has availed credit from the bank to manufacture goods
False
True or false a sight draft allows for a delay in payment
False
True or false barter is a reciprocal buying agreement that occurs when a firm agrees to purchase a certain amount of materials back from a country to which I sale is made
False
True or false countertrade is least attractive to large, diverse multinational enterprises
True
True or false exporters often face voluminous paperwork and complex formalities
True
True or false ignorance of the potential opportunities is a huge barrier to exporting
true
True or false ignorance of the potential opportunities is a huge barrier to exporting
True
True or false nearly every state in the United States maintains active trade commissions to promote exports
True
True or false the bill of lading can function as collateral against which funds may be advanced to the exporter by it's local bank
False
True or false the small business administration organizers trade events that help potential exporters make foreign contacts and explore explore opportunities held in major cities worldwide
True
True or false the term switch trading refers to the use of a specialized third-party trading house in a counter trade arrangement
False
True or false time drafts cannot be sold to investors at a discount from face value
True
True or false when I Tom draft is drawn on an excepted by business firm it is called a trade except
False
True or faults Time drafts cannot be sold to investors a discount from face value
True
True or faults hiring an export management company (EMC) will help a nervous exporter identify opportunities and navigate the paperwork involved in exporting
False
True or faults proactive firms do not consider exporting until their domestic market is saturated
Exporters often face voluminous paperwork and complex formalities
What is a common difficulty that traders face when exporting goods or services to other countries? small firms tend to be a more aggressive than larger firms in global trade governments do not provide much assistance to exporters growth opportunities are often limited in global markets exporters often face voluminous paperwork and complex formalities
Countertrade contacts may involve the exchange of unusable or poor quality goods
What is a disadvantage of countertrade? Countertrade contracts may involve the exchange of unusable or poor quality good Countertrade requires the firm to use an out of house trading company to which much of the profit will go Countertrade contracts often involve high quality expensive goods that the firm cannot move enough of to be profitable Countertrade requires employing lawyers who specialize in these unique types of contracts
They are intimidated by the complexities and mechanics of exporting to countries were business practices, language, culture, legal systems, and Curren$y are very different from the home market
What is a reason that firms take a reactive approach to exporting rather than a proactive approach? Most firms are familiar with the foreign market opportunities and therefore do not need to utilize proactive approaches they are intimidated by the complexities and mechanics of exporting to countries were business practices, language, culture, legal systems, and currency are very different from the home market most firms already know where the market potential and opportunities are and they do not need to be proactive they are not intimidated by the complexities of mechanics of exporting to foreign countries and can therefore use the same reactive approaches that work in their home market
They consider exporting only after their domestic market is saturated
What is true of reactive firms? Reactive firms consider a variety of markets for selling their products and services they consider exporting only after their domestic market is saturated they systematically scanned foreign markets for profitable explore opportunities they create excess productive capacity and actively hunt for opportunities in foreign markets
A common pitfall of exporting is a poor understanding of competitive conditions in the foreign market
What is true or exporting? A common pitfall of exporting is a poor understanding of competitive conditions in the foreign market Securing financing is rarely a problem for exporters A common pitiful of exporting is trying too hard to customize a product offering rather than "sticking with what you know" Most exporters have a very good understanding of the competitive conditions in the foreign market
It helps international traders engage in trade with trust
Which is the following is a major advantage of using a letter of credit? It gives the importer time to resell the merchandise before payment It guarantees the exporter reexport financing It helps international traders engage in trade with trust It guarantees the importer extra funds for other purposes
The importer must pay a bank fee for the letter of credit
Which of the following is a disadvantage of using a letter of credit (L/C)? A letter of credit does not give protection to the importer A letter of credit does not give protection the the exporter The exporter cannot avail pre-export financing when using a L/C The importer must pay a bank fee for the letter of credit
It helps international traders engage in trade with trust
Which of the following is a major advantage of using a letter of credit? It gives the importer time to resell the merchandise before payment it guarantees the exporter pre-export financing it helps international traders engage in trade with trust it guarantees the importer extra funds for other purposes
Counter trade may involve the exchange of unusable goods
Which of the following is a major drawback of engaging in counter trade? Countertrade is not useful when trading with developing nations financing is difficult when engaging in countertrade it is not attractive to small organizations countertrade me involve the exchange of unusable goods
ELAN
Which of the following is a nationwide group of international trade attorneys who provide free initial consultations to miniature businesses on export related matters? ELAN EMC MITI SCORE
It is an effective way of doing business with developing nations
Which of the following is an advantage of countertrade? Countertrade uses instruments such as time drafts and sight drafts It is an effective way of doing business with developing nations It provides exporters an opportunity to obtain direct revenue Countertrade prevents the exchange of unusable or poor quality goods
The SBA employs trade officers throughout the United States
Which of the following statements is true about the Small Business Administration (SBA)? It is the most comprehensive source of export opportunities information The SBA is a private organization organization managed by leaders of large corporations The SBA employs trade officers throughout the United States The SBA offers help exclusively to small businesses that sell products within the United States
Counter trade occurs when goods and services are traded for other goods and services
Which of the following statements is true of counter trade? Countertrade reduces the profitability of competing firms and is considered an unethical practice countertrade is a conventional means to pay exporters smaller organizations commonly used counter trade in international transactions countertrade occurs when goods and services are traded for other goods and services
The foreign credit insurance association provides coverage against commercial risks and political risks
Which of the following statements is true of export credit insurance? Exporters will require more insurance if a letter of credit is used in transactions The foreign credit insurance association provides coverage against commercial risks and political risks Private associations cannot offer export insurance in the United States Organizations do not receive coverage against political risks of global trade
EMCs are export specialist that can act on behalf of their client firms
Which of the following statements is true of export management companies (EMCs)? An EMC. Is a transportation company that engages in international business EMCs are export import banks that manage foreign exchanges EMCs are export specialists that act on behalf of their client firms An EMC is an intermediary that facilities talks between two nations
It helps a firm achieve economies of scale
Which of the following statements is true of exporting? It increases the trade deficit the nations have exporting leads to diseconomies of scope it helps a firm achieve economies of scale exporting is not beneficial to the countries economy
Switch trading
Which of the following terms refers to the use of specialize third-party trading house in a counter trade agreement? Counter purchase barter offset switching trade
Counterpurchase
____ is a reciprocal buying agreement and occurs when a firm agrees to buy a certain amount of materials back from a country to which a sale is made Counterpurchase Barter Offset Switchtrading
Barter
_____ is viewed as the most restrictive countertrade arrangement Barter Offset Buyback Switch trading
A buyback
______ occurs when a firm supplies technology equipment training and other services in a country and agrees to take a certain percentage of the resultant output as partial payment for the contract a counter purchase an offset a barter a buyback
Barter
_______ is primarily used for one time only deals in transactions with trading partners who are not creditworthy or trustworthy Counterpurchase Barter Offset Buyback
Countertrade
________ can be used when a government restricts the convertibility of its currency to preserve its foreign exchange reserves so they can be used to service international debt commitments and purchase crucial imports A buyback Countertrade An offset Switch trading
An export management company
________Can help new exporters identify opportunities and avoid common pitfalls an MITR an export import bank an in-house training department an export management company
Counter trade
________Is an alternative means of structuring an international sale when conventional means of payment are difficult, costly, or nonexistent barter offset counter trade buyback
Counter purchase
________Occurs when a firm agrees to purchase a certain amount of materials back from a country to which is sale is made. Barter offset counter purchase buyback
Counter purchase
_________Is a reciprocal buying agreement and occurs when a firm agrees to buy certain amount of materials back from the country to which a sale is made counter purchase barter offset switch trading
Counter trade
__________Denotes a range of barter like agreements and it's principle is to trade goods and services for other goods and services when they cannot be treated for money counter trade cross-selling matchmaking letter of credit
Switch trading
__________Occurs when a third-party trading house bars the farms counter purchase credits and sells them to another firm that can better use them countertrading offsetting switch trading bartering
SCORE
through its ________ program, the SBA oversees about 11,500 volunteers with international trade experience to provide one on one counseling to active and new export businesses Matchmaker SCORE ELAN trade fair
