mgmt 425 chapter 16

As a contract, the bill of lading specifies that the carrier: a) is obligated to provide a transportation service in return for a certain charge b) receives payment from a third-party such as a bank or trading house. c) has obtained the merchandise described on the face of the document. d) provides a written promise of payment before releasing the merchandise.

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

Which of the following is the main objective of the SCORE program administered by the SBA? a) providing one-on-one counseling to active and new-to-export businesses b) acting as the export marketing department for their U.S. exporting firms c) running trade houses in various cities across the United States d) providing legal services to exporters and importers in the United States

a) providing one-on-one counseling to active and new-to-export businesses

In the United States, export credit insurance is provided by the ________, an association of private commercial institutions operating under the guidance of the Export-Import Bank. a) Service Corps of Retired Executives (SCORE) b) Foreign Credit Insurance Association (FCIA) c) Ministry of International Trade and Industry (MITI) d) Department of Commerce (DOC)

b) Foreign Credit Insurance Association (FCIA)

Which of the following describes the Export-Import (Ex-Im) Bank? a) It is an international financial institution formed to help developing nations. b) It is a wholly owned corporation of the U.S. government and promotes international trade. c) It is an international financial institution that provides capital loans. d) It focuses on policies that have an impact on the exchange rate and the balance of payments.

b) It is a wholly owned corporation of the U.S. government and promotes international trade

Which of the following is true of many novice exporters? a) Novice exporters tend to overestimate the management resources that have to be dedicated to this activity and end up expending too much money on management to make the export business profitable. b) Novice exporters often have a poor understanding of competitive conditions in the foreign market. c) Novice exporters are able to gauge which products are best for customization in the foreign country. d) Novice exporters usually do not have problems securing financing or promoting their product, the problem is usually in the distribution program.

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

A counterpurchase occurs when: a) a direct exchange of goods and services takes place between two parties without a cash transaction. b) a firm agrees to buy a certain amount of materials back from a country to which a sale is made. c)exchange of goods and services occur through a bank in the exporter's country. d) 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.

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

Which of these is a common difficulty that traders face when exporting goods or services to other countries? a) Most firms do not receive any significant assistance from the governments. b) Firms often face aggressive competition from smaller firms. c) Many customers require face-to-face negotiations on their home turf. d) Most global markets are saturated and present limited growth opportunities.

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

Michael's company would like to sell its products to a company in Nicaragua, but it fears that the company will not pay for the products in a timely manner. Instead of asking for cash, Michael's company decides to ask for a shipment of coffee and tobacco products in exchange for their products. What type of countertrade is Michael's company using? a) offset b) switch trading c) barter d) counterpurchase

c) barter

A letter of credit is a document that a) is secured by the exporter after shipping the product shipment. b) awards the title of a product to the importer. c) is issued by a bank at the request of an importer. d) is issued by the exporter to promise that he will allow a delay in payment.

c) is issued by a bank at the request of an importer.

What intermediary is typically used to establish trust during an international trade transaction? a) the customer b) a host-country government official c).a home-country government official d) a reputable bank

d) a reputable bank

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? a) banker's acceptance b) letter of credit c) bill of lading d) bill of exchange

d) bill of exchange

Sharon works for a cereal manufacturing company. Her company recently built a manufacturing facility in Canada and agreed to take 15 percent of the cereal produced as partial payment over a ten-year period. What form of countertrade is her company pursuing? a) offset b) barter c) countertrade d) buyback

d) buyback

A major advantage of countertrade is that it: a) uses time drafts for transactions and users can delay payments. b) provides exporters an opportunity to obtain direct revenue. c) prevents exchange of unusable or poor-quality goods. d) helps firms finance export deals when there are no other means.

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

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

false

true or false: A sight draft allows for a delay in payment—typically, 30, 60, 90, or 120 days.

false

true or false: Companies that have well-established exporting procedures typically use an export management company to handle financial transactions.

false

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

false

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

false

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

true

true or false: Switch trading involves the use of a specialized third-party trading house in a countertrade agreement.

true