Ch. 14

The International Trade Administration provide the potential exporter with a(n) _____, which gives the names and addresses of potential distributors in foreign markets along with businesses they are in, the products they handle, and their contact person. A. ELAN list B. "best prospects" list C. "comparison shopping service" D. SCORE list E. export management list

"best prospects" list

When serving as a _____, a bill of lading is used to obtain payment or a written promise of payment before the merchandise is released to the importer. A. document of title B. contract C. receipt D. time draft E. collateral

document of title

In international commerce, a _____ refers to an order written by an exporter instructing an importer to pay a specified amount of money at a specified time. A. bill of lading B. draft C. letter of credit D. counterpurchase E. buyback

draft

Firms that do not export often: A. face problems of currency conversion. B. lose out on significant opportunities for cost reduction. C. are able to reduce their unit costs. D. are not intimidated by the business practices of foreign countries. E. explore foreign markets to see where they can leverage their technology.

lose out on significant opportunities for cost reduction.

In international commerce, a party initiating a draft is known as the _____. A. maker B. drawee C. buyer D. agent E. drafter

maker

A(n) _____ refers to a buying agreement similar to counterpurchase, but the exporting country can then fulfill the agreement with any firm in the country to which the sale is being made. A. switch trade B. offset C. buyback D. arbitrage E. barter

offset

When a firm enters a(n) _____ agreement with a country, it often ends up with what are called counterpurchase credits, which can be used to purchase goods from that country. A. arbitrage B. offset C. switch trading D. buyback E. compensation

offset

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.

the conventional means of international trade are difficult.

Which of the following is a strategic step taken to increase a firm's probability of exporting successfully? A. Avoiding the use of export management companies to contain costs B. Entering several markets simultaneously to hedge risk C. Entering a foreign market on a small scale D. Waiting for export opportunities E. Avoiding recruitment of local personnel

Entering a foreign market on a small scale

In terms of using a third party in international trade, title to the products is given to a bank by the exporter in the form of a document known as a _____. A. merchandise bill B. bill of lading C. bill of exchange D. draft E. letter of credit

bill of lading

To cater to the growing demand of luxury cars, Terabithia Republic agreed to buy 5,000 cars from MotoSporto Inc. in exchange for 5,000 gallons of oil. Due to a lack of trust, Terabithia decided to make it a one-time-only deal. Which of the following forms of countertrade is the country most likely to use? A. Counterpurchase B. Offset C. Switch trading D. Barter E. Buyback

Barter

Which of the following is a distinct type of countertrade arrangement? A. Merger B. Arbitrage C. Dirty float D. Barter E. Deregulation

Barter

Which of the following types of countertrade is the simplest, although not common? A. Switch trading B. Counterpurchase C. Barter D. Offset E. Buyback

Barter

A firm sells some products to a foreign country. The foreign country pays the firm in dollars, but in exchange, the firm agrees to spend some of the proceeds from the sale on textiles produced by the foreign country. In which of the following types of countertrade arrangement are the two parties engaged? A. Switch trading B. Buyback C. Counterpurchase D. Barter E. Compensation

Counterpurchase

_____, a type of countertrade, occurs when a firm agrees to purchase a certain amount of materials back from a country to which a sale is made. A. Barter B. Counterpurchase C. Compensation D. Switch trading E. Buyback

Counterpurchase

The _____ guarantees repayment of medium- and long-term loans U.S. commercial banks make to foreign borrowers for purchasing U.S. exports. A. United Nations B. Central Bank C. World Bank D. Ex-Im Bank E. Export Credit Insurance Association

Ex-Im Bank

The mission of the _____ is to provide financing aid that will facilitate exports, imports, and the exchange of commodities between the United States and other countries. A. sogo shosha B. World Bank C. Overseas Commercial Service D. Ex-Im Bank E. Export Credit Insurance Association

Ex-Im Bank

_____ has a direct lending operation under which it lends dollars to foreign borrowers for use in purchasing U.S. exports. A. The Department of Commerce B. The World Bank C. Ex-Im Bank D. Bank of New York E. The Small Business Administration

Ex-Im Bank

Which of the following is true of a letter of credit in international trade? A. No cash deposit or collateral is required from the importer. B. The exporter pays the trusted third party (usually a bank) a fee for the service. C. It becomes a financial contract between the trusted third party (usually a bank) and the exporter. D. It is issued by the exporter at the request of the importer. E. The creditworthiness of the importer is irrelevant when issuing a letter of credit.

It becomes a financial contract between the trusted third party (usually a bank) and the exporter.

Which of the following is true of barter as a countertrade arrangement? A. It is a very complex arrangement. B. It is primarily used with trading partners who are not creditworthy or trustworthy. C. It involves cash transactions. D. When goods are exchanged simultaneously, one partner ends up financing the other. E. It is the most flexible countertrade arrangement.

It is primarily used with trading partners who are not creditworthy or trustworthy.

Which of the following stands at the center of international commercial transactions and is issued by a bank at the request of an importer? A. Bill of lading B. Time draft C. Letter of credit D. Sight draft E. Bill of exchange

Letter of credit

Through its _____ program, the Small Business Administration oversees almost 11,500 volunteers with international trade experience to provide one-on-one counseling to active and new-to-export businesses. A. Export Legal Assistance Network B. Service Corps of Retired Executives C. International Trade Veteran's Group D. Network of Foreign Trade Executives E. Export Management Company

Service Corps of Retired Executives

Which of the following drafts is payable on presentation to the drawee? A. Bill of lading B. Sight draft C. Letter of credit D. Time draft E. Offset

Sight draft

_____, a type of countertrade, occurs when a third-party trading house buys the firm's counterpurchase credits and sells them to another firm that can better use them. A. Barter B. Switch trading C. Offset D. Buyback E. Compensation

Switch trading

When a time draft is drawn on and accepted by a bank, it is known as a _____. A. trade acceptance B. banker's check C. banker's acceptance D. bill of lading E. letter of credit

banker's acceptance

Which of the following is a drawback of relying on an export management company (EMC)? A. It does not provide references and has no antecedents. B. The exporting company can fail to develop its own exporting capabilities. C. It does not have expert specialists to help neophyte exporter identify opportunities. D. It typically lacks information about local business regulations. E. The exporting company cannot avoid the common pitfalls of exporting.

The exporting company can fail to develop its own exporting capabilities.

Which of the following is true of medium-sized and small firms? A. They are proactive about seeking opportunities for profitable exporting. B. They consider exporting only after their domestic market is saturated. C. They are not intimidated by the complexities of foreign legal systems. D. They have a high degree of familiarity with foreign market opportunities. E. They explore foreign markets to see where the opportunities lie for leveraging their technology.

They consider exporting only after their domestic market is saturated.

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 issued in favor of the exporter for the merchandise the importer wishes to buy. C. The importer places an order with the exporter and asks the exporter if he would be willing to ship under a letter of credit. D. The exporter ships the goods to the importer on a common carrier. An official of the carrier gives the exporter a bill of lading. E. The trusted third party (usually a bank) issues a letter of credit in the importer's favor and sends it to the exporter's bank.

The importer places an order with the exporter an asks the exporter if he would be willing to ship under a letter of credit.

The direct exchange of goods and/or services between two parties without a cash transaction is referred to as _____. A. switch trading B. counterpurchase C. barter D. offset E. buyback

barter

Which of the following drafts allows for a delay in payment? A. Sight draft B. Time draft C. Bill of lading D. Counterpurchase E. Offset

Time draft

In international commerce, a draft is sometimes referred to as a _____. A. bill of exchange B. letter of credit C. bill of lading D. counterpurchase E. buyback

bill of exchange

A _____ is issued to an exporter by a common carrier transporting the merchandise and it serves as a receipt, a contract, and a document of title. A. bill of lading B. collateral C. draft D. letter of credit E. bill of exchange

bill of lading

A(n) _____ refers to an export specialist that acts as an export marketing department for client firms. A. export management company B. export-import firm C. foreign direct investment management firm D. strategy management company E. association of export companies

export management company

An export credit insurance is necessary when the: A. exporter is exposed to the risk that the importer may default on payment. B. exporter is dealing in a country that has a nonconvertible currency. C. exporter is unable to obtain any pre-export financing. D. exporter has received a letter of credit from the importer's bank. E. exporter has to enter a barterlike agreement.

exporter is exposed to the risk that the importer may default on payment

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. E. importer defaults on payment.

exporter may not be paid in his or her home currency due to nonconvertibility

A letter of credit reduces an importer's ability to borrow funds for other purposes because: A. the importer has to request for it. B. it is a financial liability against the importer. C. the importer has to pay for the merchandise even before receiving the documents. D. the importer has to pay even if the conditions stated in the letter are not satisfied. E. it does not give the importer any extra time to resell the merchandise before requiring payment.

it is a financial liability against the importer

Large firms generally tend to be _____ about seeking opportunities for profitable exporting. A. passive B. risk averse C. wary D. proactive E. neutral

proactive

Exporting is nearly always a way to increase the revenue and profit base of a company because: A. there is little competition in the international market. B. foreign governments encourage imports from other countries. C. international markets are less complex than their domestic counterparts. D. the international market is much larger than the domestic market. E. it does not involve wasting resources on paperwork.

the international market is much larger than the domestic market.

Many medium-sized and small firms are not proactive in seeking export opportunities because: A. they are familiar with the foreign market and do not find it challenging enough. B. the export market is similar to the home market in terms of legal and business practices. C. they are intimidated by the complexities and mechanics of exporting to foreign countries. D. domestic regulations limit their ability to export profitably. E. they overestimate the time and expertise needed to cultivate business in foreign countries.

they are intimidated by the complexities and mechanics of exporting to foreign countries.

When a time draft is drawn on and accepted by a business firm, it is known as a(n) _____. A. trade acceptance B. in-transit bill C. banker's acceptance D. bill of lading E. letter of credit

trade acceptance

When a time draft is presented to a drawee, he or she signifies acceptance of it by: A. delivering the goods immediately. B. paying the draft amount immediately. C. providing a collateral for the amount specified in the bill. D. writing or stamping a notice of acceptance on its face. E. selling the draft to an investor at a discount from its face value.

writing or stamping a notice of acceptance on its face

TruWorth Petroleum negotiated a deal with a foreign country in which TruWorth would build several ammonia plants in the foreign country and receive ammonia as partial payment over a 20-year period. This is an example of _____. A. switch trading B. a buyback C. a counterpurchase D. an offset E. barter

a buyback

The most comprehensive source of information on export opportunities for U.S. firms is the _____. A. Small Business Administration B. Department of Commerce C. Federal Trade Commission D. Bureau of Competition E. Bank of New York

Department of Commerce

A drawback of countertrade is that: A. it fails to enable firms to finance an export deal. B. it is detrimental to the economy of the importing country. C. developing nations have trouble raising the foreign exchange necessary to pay for imports. D. it does not allow firms to invest in an in-house trading department dedicated to arranging and managing deals. E. it may involve the exchange of poor-quality goods that cannot be disposed of profitably.

it may involve the exchange of poor-quality goods that cannot be disposed of profitably

In international trade, an exporter wants to be paid before a consignment is shipped. Correspondingly, the importer wants to pay only upon receipt of the consignment. These conflicting preferences of the parties are a manifestation of _____. A. corporate greed B. acculturation C. lack of trust D. cultural insensitivity E. countertrading opportunities

lack of trust

Countertrade is most attractive to: A. small exporters. B. large multinational enterprises. C. only U.S. firms. D. any firm in democratic nations. E. new companies.

large multinational enterprises

A _____ is issued by a bank, and it indicates that the bank will make payments under specific circumstances. A. bill of exchange B. bill of lading C. letter of credit D. time draft E. usance draft

letter of credit

The U.S. Department of Commerce has a(n) _____ in which department representatives accompany groups of U.S. businesspeople abroad to meet with qualified agents, distributors, and customers. A. matchmaker program B. "best prospects" list C. SCORE program D. "comparison shopping service" E. export-import program

matchmaker program

The sogo shosha of Japan: A. proactively and continuously seek export opportunities for their affiliated companies. B. exclusively serve the largest and most prestigious companies in Japan. C. have offices concentrated in the business district of Tokyo. D. have monopolized the export market in the country. E. consider export only when there is excess production at home.

proactively and continuously seek export opportunities for their affiliated companies.

_____ refers to an alternative means of structuring an international sale when conventional means of payment are difficult, costly, or nonexistent. A. Guanxi B. Factoring C. Securitization D. Countertrade E. Sogo shosha

Countertrade

The _____ refers to a nationwide group of international trade attorneys who provide free initial consultations to small businesses on export-related matters. A. TradeNet Export Advisor B. Export Trade Assistance Partnership C. United States Trade Service D. Export Legal Assistance Network E. Ex-Im Network

Export Legal Assistance Network

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

Export-Import Bank

Which of the following is true of exporting? A. It takes a very short time before all foreigners are comfortable enough to purchase in significant quantities. B. Novice exporters tend to overestimate the time required to cultivate business in foreign countries. C. Exporters often face voluminous paperwork, complex formalities, and many potential delays and errors. D. Large firms are usually unfamiliar with foreign market opportunities. E. Large firms do not consider exporting until their domestic market is saturated.

Exporters often face voluminous paper work, complex formalities, and many potential delays and errors.

Which of the following is a disadvantage of barter as a countertrade arrangement? A. It is a very complex arrangement. B. In a barter system, if goods are exchanged simultaneously, one party ends up financing the other. C. Firms engaged in barter run the risk of having to accept goods they do not want or cannot use. D. It involves huge cash transactions. E. It cannot be used in transactions with trading partners who are not creditworthy.

Firms engaged in barter run the risk of having to accept goods they do not want or cannot use.

Which of the following is a disadvantage of a countertrade agreement? A. It does not allow firms to finance an export deal when other means are not available. B. It is unattractive to multinational companies due to its time-consuming and expensive nature. C. Firms prefer to be paid in hard currency. D. It is useful only for small companies. E. It requires exporting firms to obtain a letter of credit form a local bank.

Firms prefer to be pain in hard currency.

In the United States, export credit insurance is provided by _____, an association of private commercial institutions. A. Export-Import Bank B. Bank of New York C. Foreign Credit Insurance Association D. Federal Deposit Insurance Corporation E. Federal Reserve Bank

Foreign Credit Insurance Association

Which of the following is true with respect to the international and domestic practices of settling trade transactions? A. In an international transaction, a formal promise to pay is required before the buyer can obtain the merchandise. B. In an international transaction, the seller usually ships merchandise on an open account. C. In a domestic transaction, a draft is used to settle trade transactions. D. In an international transaction, the exporter sends a commercial invoice that specifies the amount due and the terms of payment to the importer. E. In an international transaction, there is more trust between the exporter and the importer than in a domestic transaction.

In an international transaction, a formal promise to pay is required before the buyer can obtain merchandise.

Which of the following is a way in which the U.S. Department of Commerce helps potential exporters? A. It oversees volunteers with international trade experience and directs them to provide one-on-one counseling to active and new-to-export businesses. B. It assembles a "comparison shopping service" for 14 countries that are major markets for U.S. exports. C. It coordinates a nationwide group of international trade attorneys who provide free initial consultations to small businesses on export-related matters. D. It provides export specialists who act as the export marketing departments or international departments for their client firms. E. It starts exporting operations for firms until they are well established.

It assembles a "comparison shopping service" for 14 countries that are major markets for U.S. exports

Which of the following is an advantage of having a letter of credit? A. It allows payment for merchandise after its delivery. B. It facilitates an exporter to obtain pre-export financing. C. It allows an exporter to get a higher price for his or her goods. D. It helps exporters incur lower shipping costs. E. It does not require the importer to pay any fee.

It facilitates an exporter to obtain pre-exporting financing.

Which of the following is an advantage of countertrade? A. Firms can avoid setting up in-house trading departments. B. It addresses the issue of lack of trust in international business. C. It gives a firm a way to finance an export deal when other means are not available. D. Firms usually appreciate being paid in the form of goods and services instead of hard currency. E. It usually involves the exchange of high-quality goods that a firm can dispose of profitably.

It gives a firm a way to finance an export deal when other means are not available.

From an exporter's perspective, why is an offset more attractive than a straight counterpurchase agreement? A. It is the simplest countertrade arrangement. B. It gives the exporter greater flexibility to choose the goods that it wishes to purchase. C. It allows the use of a specialized third-party trading house. D. It gives the exporter counterpurchase credits, which can be used to purchase goods from another country. E. It allows direct exchange of goods and/or services between two parties without a cash transaction.

It gives the exporter greater flexibility to choose the goods that it wishes to purchase.

Which of the following is a characteristic of a time draft? A. It has no value given the deferred nature of the document. B. It is generally not preferred in international transactions. C. It is a negotiable instrument. D. It is also known as a bill of lading. E. It cannot be sold by an exporter.

It is a negotiable instrument.

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.

It is a reciprocal buying agreement.

Which of the following is an advantage of export credit insurance? A. It gives a specified sum of money to a beneficiary, normally the exporter, on presentation of particular, specified documents. B. It protects exporters from the risk that the foreign importer will default on payment. C. It puts the importer in a strong bargaining position. D. It enables exporters to insist on a letter of credit. E. It allows for a delay in payment.

It protects exporters from the risk that the foreign importer will default on payment.

Which of the following is an advantage of exporting? A. It helps in easy currency conversion. B. It provides large revenue and profit opportunities. C. It reduces the administrative costs incurred by a company. D. It helps companies increase their unit costs. E. It reduces paperwork and complex formalities.

It provides large revenue and profit opportunities.

For an importer, which of the following is a disadvantage of using a letter of credit for international transactions? A. It results in the importer losing control over the process of trading. B. It reduces the exporter's level of trust in the importer. C. It reduces the importer's ability to borrow funds for other purposes. D. It requires the importer to repay the loan even before the merchandise is sold. E. It is not issued at the importer's request.

It reduces the importer's ability to borrow funds for other purposes.

Identify a drawback of a countertrade agreement. A. It fails to give firms a way to finance an export deal. B. It requires an in-house trading department to be maintained, which can be expensive and time-consuming. C. It is detrimental to the economy of the importing country. D. Developing nations may have trouble raising the foreign exchange necessary to pay for imports. E. It is not an acceptable means of trading in most developing countries.

It requires an in-house trading department to be maintained, which can be expensive and time-consuming.

Which of the following is true of an export management company (EMC)? A. It coordinates the Export Legal Assistance Network, a nationwide group of international trade attorneys who provide free initial consultations to small businesses on export-related matters. B. It provides a potential exporter with a "best prospects" list. C. It assembles a "comparison shopping service" for 14 countries. D. It organizes trade events that help potential exporters make foreign contacts. E. It specializes in serving firms in particular industries and in particular areas of the world.

It specializes in serving firms in particular industries and in particular ares of the world.

Which of the following is a function of an export management company? A. It starts exporting operations for a firm with the understanding that the firm will take over operations after they are well established. B. It coordinates the Export Legal Assistance Network, a nationwide group of international trade attorneys. C. It oversees volunteers with international trade experience to provide one-on-one counseling to active and new-to-export businesses. D. It collects duties on exported products and sets interest rates for charging foreign investors. E. It gives novice exporters the names and addresses of potential distributors in foreign markets along with businesses they are in.

It starts exporting operations for a firm with the understanding that the firm will take over operations after they are well established.

Which of the following is true of a letter of credit? A. It states that the bank will pay a specified sum of money to a beneficiary on presentation of particular, specified documents. B. It is a document written by an exporter instructing an importer to pay a specified amount of money at a specified time. C. It serves as a receipt, a contract, and a document of title. D. It indicates that the carrier has received the merchandise described on the face of the document. E. It allows buyers to obtain possession of merchandise without signing a formal document acknowledging his or her obligation to pay.

It states that the bank will pay a specified sum of money to a beneficiary on presentation of particular, specified documents.

Which of the following is true of exporting? A. Many foreign customers require face-to-face negotiations on their home turf. B. Large firms tend to wait for the world to come to them, rather than going out into the world to seek opportunities. C. Exporters have the advantage of reduced paperwork and fewer formalities. D. Medium-sized and small firms are proactive about seeking opportunities for profitable exporting. E. Firms that focus only on exporting often lose out on significant opportunities for growth and cost reduction.

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

Which of the following is a common pitfall that novice exporters come across? A. Poor understanding of the opportunities in the domestic market B. Low unit costs C. Increased economies of scale D. Problems securing financing E. Familiar distribution systems

Problems securing financing

The _____ is a government organization that helps potential exporters. It employs 76 district international trade officers and 10 regional international trade officers throughout the United States as well as a 10-person international trade staff in Washington, DC. A. Federal Trade Commission B. U.S. Commercial Service C. International Trade Administration D. Small Business Administration E. sogo shosha

Small Business Administration

Which of the following organizations runs the Service Corps of Retired Executives (SCORE) program? A. Foreign Credit Insurance Association B. International Trade Administration C. Small Business Administration D. U.S. Department of Commerce E. U.S. Commercial Service

Small Business Administration

Which of the following institutions within the U.S. Department of Commerce is dedicated to providing businesses with intelligence and assistance for attacking foreign markets? A. The International Trade Administration B. The Small Business Administration C. The Federal Trade Commission D. The Bureau of Competition E. The Bank of New York

The International Trade Administration

Which of the following is true of the export performance of the United States, Germany, and Japan? A. Historically, the United States has made its living as a trading nation. B. Germany has been a relatively self-contained continental economy in which international trade played a minor role. C. Unlike Japan, U.S. firms have a strong information advantage when they seek export opportunities. D. The United States has not yet evolved an institutional structure for promoting exports similar to that of Germany. E. The Ministry of International Trade and Industry (MITI) in the United States is always on the lookout for export opportunities.

The United States has not yet evolved an institutional structure for promoting exports similar to that of Germany.

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 only be paid in his or her home currency. E. Most exporters desire payment in a currency that is not convertible.

The governments of developing nations sometimes insist on a certain amount of countertrade.

Which of the following is an advantage of a letter of credit for an importer? A. The importer does not have to pay for the merchandise until the documents have arrived. B. Obtaining pre-export financing becomes easier. C. It helps the importer to get goods for a lower price. D. It results in lower shipping costs. E. The importer does not have to pay the third party a fee for facilitating the transaction.

The importer does not have to pay for the merchandise until the documents have arrived.

Which of the following is true of the International Trade Administration and the U.S. Commercial Service? A. They are private organizations that assist U.S. exporters. B. They are the great trading houses of the United States. C. They are organizations within the U.S. Department of Commerce. D. They are departments in the Small Business Administration. E. They are global export management companies.

They are organizations within the U.S. Department of Commerce.

Which of the following is a reason why firms are not proactive about seeking export opportunities? A. They are unfamiliar with foreign market opportunities. B. domestic regulations limit their ability to export profitably. C. they overestimate the time and expertise needed to cultivate business in foreign countries. D. they do not find the foreign market challenging enough. E. the export market is similar to the home market in terms of legal and business practices.

They are unfamiliar with foreign market opportunities.

Firms engaged in international trade deal with people they may have never seen, who live in different countries, who speak different languages, and who abide by different legal systems. These factors result in: A. easy tracking of the parties involved. B. a lack of trust between the parties. C. strict enforcement of contractual obligations. D. rapid acculturation. E. better understanding of how transactions should be configured.

a lack of trust between the parties

The most restrictive countertrade arrangement is _____ because if goods are not exchanged simultaneously, one party ends up financing the other for a period. A. counterpurchase B. offset C. barter D. switch trading E. buyback

barter

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. A. counterpurchase B. offset C. switch trading D. buyback E. barter

buyback

The lack of a letter of credit exposes the exporter to the risk that the foreign importer will default on payment. The exporter can insure against this possibility by: A. approaching the World Bank. B. buying export credit insurance. C. obtaining pre-export financing. D. filing a suit against the importer in court. E. taking financial aid from Ex-Im Bank.

buying export credit insurance.

When serving as collateral, the bill of lading: A. can be used to advance funds to the exporter by its local bank before or during shipment. B. specifies that the carrier is obligated to provide a transportation service in return for a certain charge. C. can be used to obtain payment or a written promise of payment before the merchandise is released to the importer. D. states that the bank will pay a specified sum of money to a beneficiary, normally the exporter, on presentation of particular, specified documents. E. is 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.

can be used to advance funds to the exporter by its local bank before or during shipment.

Due to the complexity and diversity of foreign markets, firms sometimes hesitate to seek export opportunities. These firms can best overcome ignorance by: A. shortening production runs. B. creating revenue. C. outsourcing decisions. D. collecting information. E. lowering unit costs.

collecting information

When serving as a _____, a bill of lading specifies that the carrier is obligated to provide a transportation service in return for a certain charge. A. contract B. receipt C. document of title D. letter of credit E. bill of exchange

contract

A range of barterlike agreements by which goods and services are traded for other goods and services when they cannot be traded for money is known as _____. A. countertrade B. carry trade C. free trade D. counter sale E. countervailing duty

countertrade

An advantage of _____ is that it helps in doing business in many developing nations that find it difficult to raise the foreign exchange necessary to pay for imports. A. mergers B. countertrade C. free trade D. arbitrage E. franchising

countertrade

The principle of _____ is to trade goods and services for other goods and services when they cannot be traded for money. A. a letter of credit B. countervailing duty C. a bill of exchange D. countertrade E. the Export Legal Assistance Network

countertrade

A lack of trust between two parties engaged in international trade is exacerbated by the: A. saturation of the domestic market. B. similar preferences of the parties regarding how a transaction should be configured. C. narrowing distance between the two parties due to technological advances. D. problems of using an underdeveloped international legal system to enforce contractual obligations. E. possibility of doing business with someone with whom they have been associated for a long time.

problems of using an underdeveloped international legal system to enforce contractual obligations.

Once accepted by the drawee, a time draft becomes a(n): A. asset for the drawee. B. in-transit bill. C. promise to pay by the accepting party. D. bill of lading. E. letter of credit.

promise to pay by the accepting party

A firm that enters many markets at once: A. runs the risk of spreading its limited management resources too thin. B. becomes established in all the markets. C. gets the time to learn about each market. D. has fewer export opportunities. E. reduces the costs of any subsequent failure.

runs the risk of spreading its limited management resources too thin.

The two categories of drafts (or bills of exchange) are: A. contract drafts and lending drafts. B. single-party drafts and multi-party drafts. C. title drafts and quantity drafts. D. sight drafts and time drafts. E. offset draft and counter draft

sight drafts and time drafts

Japan's great trading houses are referred to as _____. A. kaizen B. sogo shosha C. zaibatsu D. guanxi E. kanban

sogo shosha

A firm concludes a counterpurchase agreement with a foreign country for which it receives some counterpurchase credits for purchasing its goods. The firm does not want any foreign goods, however, so it sells the credits to a third-party trading house at a discount. The trading house finds a firm that can use the credits and sells them at a profit. This is an example of _____. A. barter B. switch trading C. an offset D. a buyback E. compensation

switch trading

The use of a specialized third-party trading house in a countertrade arrangement is known as _____. A. counterpurchase B. offset C. switch trading D. buyback E. barter

switch trading

In the modern era, countertrade arose in the 1960s as a way for _____ to purchase imports. A. the United States B. the Soviet Union C. Germany D. Japan E. Africa

the Soviet Union

Organizations resort to countertrade of goods and services when: A. the importer defaults on payment. B. the goods and services cannot be traded for money. C. the exporter is not able to get a letter of credit from a local bank. D. a formal document for acknowledgement is not available. E. the conventional means of payment are cheaper.

the goods and services cannot be traded for money.

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 the importer will default on payment.

the importer is in a strong bargaining position