SCM 411 EXAM 2 Ch 6-10
The liability of a single P&I club is limited to
$7 million.
A ship valued at $1,337,500 is carrying a cargo of iron ore valued at $125,000, and a cargo of coal valued at $100,000. The ship is stranded and the captain jettisons what is later determined to be $12,500 worth of iron ore. The stranded ship is towed to port, receives a bill from the tug company of $56,250 and is determined to have suffered $71,875 worth of damage to the ship. The captain declares a general average. How much liability will the company shipping the coal have?
$9,000
A ship valued at $1,337,500 is carrying a cargo of iron ore valued at $125,000, and a cargo of coal valued at $100,000. The ship is stranded and the captain jettisons what is later determined to be $12,500 worth of iron ore. The stranded ship is towed to port, receives a bill from the tug company of $56,250 and is determined to have suffered $71,875 worth of damage to the ship. The captain declares a general average. How much liability will the company shipping the coal have?
$9,000 Lost ore value plus tug fees plus ship damage Divided by Ship value plus ore value plus coal value $12,500 + 56,250 + 71,875 = .09, the ratio of losses to combined $1,337,500 + 125,000 + 100,000 value of cargo and ship The company shipping the coal has a liability of $100,000 ×. 09 or $9,000.
An SED is 1)an Incoterm. 2)a proprietary commercial electronic data interchange. 3)a manifest. 4)a certificate of title. 5)A document required of exporters by U.S. Customs.
A document required of exporters by U.S. Customs.
container terminal
A location where containerized cargo changes mode of transportation.
Incoterm rule variant
A modification to an Incoterm rule, not sanctioned by the ICC, that changes one or more of its parameters.
"Warehouse-to-Warehouse" coverage is an extension to the traditional
All Risks policy. With Average policy. Free of Particular Average policy.
"Warehouse-to-Warehouse" coverage is an extension to the traditional
All Risks policy. With Average policy. Free of Particular Average policy. ALL OF THE ABOVE
Market-based forecasting of exchange rates
All of the above (is based on the premise that "the market knows best." b. attempts to capture the collective knowledge of sophisticated speculators in the future spot rate of a currency. c. does not take into account government interventions.)
LCL shipment
An international shipment that is combined with other shipments in a single container.
FCL shipment
An international shipment that uses, by weight or volume, the entire capacity of a container.
FCA
At the exporter's premises, the exporter loads the goods onto a transport conveyance of a carrier selected by the importer.
At Lloyd's, individuals assuming (insuring) risks on their personal fortunes are called
Bespoke Names.
At Lloyd's, individuals assuming (insuring) risks on their personal fortunes are called
Bespoke names
Certain countries do not allow importers to purchase insurance abroad. Which Incoterm is therefore not available to importers located in these countries? 1) FCA 2) CIP 3) DAP 4) DES 5) FOB
CIP
Which of the following is a marine insurance company?
Cigna
Which of the following is an insurance company?
Cigna
Condensation damage is covered by All Risks policy and
Coverage A of the Institute Marine Cargo Clauses.
Among the following, the most customer-friendly Incoterms® Rule is 1) FCA 2) CIP 3) DAT 4) DES 5) FOB
DAT
In a quote which includes multiple Incoterms® Rules, so that the customer can choose, the Incoterms® Rule that has the highest invoiced amount is 1) EXW 2) FCA 3) DDP 4) CIP 5) DAT
DDP
Which Incoterms® Rule(s) requiring the exporter to pay import duty? 1) FCA 2) CIP 3) DDP 4) EXW 5) DAP
DDP
In 1996, the _____ was revised to a U.S. export policy stating that "everything is authorized unless it is specifically prohibited." 1) destination control statement 2) EAR 3) pro forma invoice 4) shipper's export declaration 5) customs export
EAR
A product not on the Commerce Control List, or whose Export Control Classification Number does not call for an export license, is classified as 1) NLR 2) SED 3) BIS 4) ICC 5) EAR99
EAR99
In terms of cost and responsibility, the easiest Incoterms® Rule for the exporter which is, in turn, the most difficult for the importer is 1)Delivered At Place (DAP). 2)Ex-Works (EXW). 3)Delivered Duty Paid (DDP). 4)Free On Board (FOB). 5)Cost and Freight (CFR).
Ex-Works (EXW).
The only Incoterms® Rule which requires the importer to clear the merchandise for export from the country from which it is coming is 1)Free Alongside Ship. 2)Ex-Works. 3)Cost and Freight. 4)Delivered Ex Quay. 5) None of the above
Ex-Works.
A "With Average" policy does not cover any losses from loading and unloading of the vessel.
F
A characteristic of options hedging is that options are commonly traded for many different currencies.
F
Although the Bank for International Settlements originally limited its membership to European Central Banks, the United States Central Bank joined in 1974.
F
Although there are many variables affecting the exchange rate of currencies, applications of fundamental forecasting using multiple regression and ANOVA readily overcome the problem of having all these variables.
F
As a theory of exchange rate determination, Purchasing Power Parity is the observation that exchange rates reflect the differences between nominal interest rates in different countries.
F
At the time a ship is stranded, its cargo usually suffers heavy damage.
F
Hull insurance does not cover the owner's liability toward the cargo owners in the case of a general average.
F
If an exporter in a developing country sells to an importer in a developed country on a CIF, the responsibility transfers from exporter to importer at the ship's rail. If there is then a loss, the exporter may suffer a cash flow problem while filing the insurance claim.
F
If it is agreed that an international exchange will be in the currency of the exporter's country, then there is no exchange rate fluctuation risk for the importer.
F
If the exporter and the importer agree that a transaction will be in the currency of the exporter's country, the exporter then bears all the risks of exchange rate fluctuation.
F
Importers generally prefer quotes that are written in the currency of the exporter's country.
F
In the long run, technical forecasting of exchange rates is very accurate.
F
It is not possible for a shipper to insure its cargo against war damages.
F
It is possible to find insurance for improper packing.
F
It is rare for cargo to fall overboard from ships.
F
Lloyd's of London is the oldest insurance company in the history of shipping.
F
Modern shipping methods mean that container cargo is rarely damaged by water.
F
Most air cargo policies are not included in the open cargo policy of a firm.
F
Most piracy occurs near Northwest Asia.
F
Ordinary leakage is of more concern in air transit than in ocean transit.
F
Since there is no problem with inherent vice in air transport, it is not listed as an exclusion in air freight insurance policies.
F
The Ex-Im Bank is the curator of the SDR
F
The Ex-Im Bank provides loans to small exporters.
F
The correct calculation of an insurance premium relies upon the determination of the expected monetary value of claims (their probability multiplied by their expected costs) multiplied by the number of policyholders. Over time, the law of averages—arithmetic averages—allows an insurance company to be profitable.
F
The following mathematical representation represents the Fisher effect theory of exchange rate determination. S(et) = (1+infD)t S(e0) (1+infF)t
F
The principle of Interest Rate Parity is that the forward exchange rate should be expressed as a premium if the foreign country is experiencing higher nominal rates than the domestic country.
F
The problem of "flags of convenience" in ocean shipping is also a problem in air transit.
F
The three ways companies can manage risk are through risk retention, risk amalgamation, and through a mixed approach.
F
The type of exchange rate for a foreign currency for immediate delivery (roughly the price of a foreign currency to be delivered within 48 hours) is called the forward rate.
F
While it is difficult to obtain, some insurers will write policies covering losses from nuclear war.
F
A characteristic of options hedging is that options are commonly traded for many different currencies.
False
A date draft goes into effect at the time the draft is endorsed (signed). T/F
False
A letter of credit is more secure than cash in advance. T/F
False
A payment guarantee is the most commonly used type of guarantee and is used to ensure that the contractor finishes the project T/F
False
A problem with TradeCard is that it is an extremely expensive alternative. T/F
False
Although the Bank for International Settlements originally limited its membership to European Central Banks, the United States Central Bank joined in 1974.
False
Although there are many variables affecting the exchange rate of currencies, applications of fundamental forecasting using multiple regression and ANOVA readily overcome the problem of having all these variables.
False
An irrevocable letter of credit cannot be canceled by the issuing bank unless the applicant agrees to it. T/F
False
As a theory of exchange rate determination, Purchasing Power Parity is the observation that exchange rates reflect the differences between nominal interest rates in different countries.
False
Documentary collections are more cumbersome and expensive than letters of credit. T/F
False
If it is agreed that an international exchange will be in the currency of the exporter's country, then there is no exchange rate fluctuation risk for the importer.
False
If the exporter and the importer agree that a transaction will be in the currency of the exporter's country, the exporter then bears all the risks of exchange rate fluctuation.
False
Importers generally prefer quotes that are written in the currency of the exporter's country.
False
In a letter of credit, the credit worthiness of the exporter is substituted for the creditworthiness of the importer. T/F
False
In most cases, it is wise to have a letter of credit confirmed by the advising bank. T/F
False
In the long run, technical forecasting of exchange rates is very accurate.
False
In those few cases in which the letter of credit does not reflect exactly the pro-forma invoice (misspellings for example), it is wiser to attempt to obtain an amendment rather than to issue an invoice that matches the letter of credit. T/F
False
The Ex-Im Bank is the curator of the SDR.
False
The Ex-Im Bank provides loans to small exporters.
False
The exporter that offers "open account" terms is less likely to clinch a sale than one that offers more secure terms, such as "letter of credit" terms. T/F
False
The following mathematical representation represents the Fisher effect theory of exchange rate determination. S(et) = (1+infD)t S(e0) (1+infF)t
False
The majority of transactions issued in the European Union are conducted on a "documentary collection" basis T/F
False
The principle of Interest Rate Parity is that the forward exchange rate should be expressed as a premium if the foreign country is experiencing higher nominal rates than the domestic country.
False
The type of exchange rate for a foreign currency for immediate delivery (roughly the price of a foreign currency to be delivered within 48 hours) is called the forward rate.
False
Usually a bank guarantee is offered by a single bank, rather than multiple banks. T/F
False
The Incoterms® Rule FCA means 1)Free Carrier. 2)From California. 3)For Countries Abroad. 4)Free Customs Administration. 5)Free Carriage Agreement.
Free Carrier.
The FOB term not only means "Free On Board," it is also sometimes referred to as 1) Freight On Bow 2) Free Over Bow 3) Freight On Board 4) Freight Over Ballast 5) None of the above
Freight On Board
stowed
Goods are aboard the ship and placed in the position in which they will be transported.
secured
Goods are tied to the vessel by means of ropes and chains.
Stevedore
Historically, an individual, and today a company, that loads and unloads goods from a vessel.
DDP
Import duty is paid by the exporter.
Delivery
In an international voyage, the point at which the responsibility for the goods switches from the exporter to the importer.
Incoterm
It is a formalized international term of trade which specifies the responsibilities of the exporter and the responsibilities of the importer in an international transaction.
main carriage
It is the portion of an international shipment that takes place between the exporting country and the importing country.
pre-carriage
It is the portion of an international shipment that takes place in the exporting country.
on-carriage
It is the portion of an international shipment that takes place in the importing country.
DAT
Main carriage may be the responsibility of the exporter or the importer.
The commercial invoice 1)is sent ahead of the shipment. 2)is the same thing as a letter of credit. 3)replaces the need for an export license. 4)is always issued in the exporter's currency 5)None of the above
None of the above
As a theory of exchange rate determination, the Fisher effect
None of the above (a. holds that exchange rates should reflect the price differences of each and every product between countries. b. reflects the Big Mac Index. c. links the forward exchange rate of a foreign currency to its spot rate. d. All of the above)
Under an American Conditions Free of Particular Average policy,
Partial losses are covered if they happen on the same voyage as a fire applies only to an English Conditions Free of Particular Average policy. In an American Conditions Free of Particular Average policy, there is poor coverage for containerized or break-bulk cargo, partial losses are covered if they result directly from a fire, and it would not be enough to cover the minimum insurance requirements of a CIF or CIP shipment.
SWIFT stands for
Society for Worldwide Interbank Financial Telecommunications
A P&I club is a mutual form of insurance.
T
Air cargo can be damaged during flight because cargo pilots do not maneuver or fly as gently as passenger pilots do.
T
All marine insurance policies carry a general average clause.
T
An options market hedge is, in effect, an insurance policy against unfavorable exchange rate fluctuations.
T
British "All Risks" policies and American "All Risks" policies are different from each other.
T
Dangerous cargo can only travel by ocean, not by air.
T
Documents transferred through SWIFT have the same value as original paper documents.
T
For Institute Marine Cargo Clauses Coverage B, losses due to bad weather are not covered.
T
For an exporter, there is a strategic advantage in quoting prices in the importer's currency and reducing the currency fluctuation risk with a forward market hedge or a money market hedge.
T
In fundamental forecasting methods, the exchange rate of a specific currency is the dependent variable.
T
Lloyd's of London acts as a market through which unusual risks are insured.
T
Lloyd's of London originally began in a coffee shop.
T
One of the most complex areas of international logistics is international insurance.
T
Some currencies are traded in the futures' market as "commodities."
T
Technical forecasting methods are essentially based upon time-series analysis.
T
The Institute Marine Cargo Clauses Coverage A, B, and C are governed by British law.
T
The International Fisher effect is the observation that exchange rates reflect the differences between nominal interest rates in different countries.
T
The Japanese government has been known to keep the value of the yen down in order to boost the Japanese economy through under-valued exports.
T
The concept of general average is exclusively used in marine insurance.
T
The standards for airfreight packing are much less stringent than for an ocean shipment.
T
The stated goal of the European Union is to eventually transform the euro to be a challenger to the U.S. dollar in its role as a preferred third-country currency.
T
Warehouse-to-Warehouse coverage is an extension to the traditional All Risks, With Average, and Free of Particular Average policies. It is an integral part of the Institute Marine Cargo Clause policies for Coverages A, B, and C, for which it is called "Transit" clause.
T
trimmed
The cargo aboard the ship is balanced side-to-side and front-to-back.
CIP
The delivery does not take place in the city of destination but at the point where the exporter delivers the goods to the carrier in the exporting country, and the exporter pre-pays the shipping charges and minimum-cover insurance.
CPT
The delivery does not take place in the city of destination but at the point where the exporter delivers the goods to the carrier in the exporting country, and the exporter pre-pays the shipping charges until the city of destination.
DAT
The delivery takes place in the terminal in the exporting country, when the goods are unloaded from the means of transportation provided by the exporter.
DAT
The delivery takes place in the terminal in the importing country, when the goods are unloaded from the ship provided by the exporter.
DAP
The delivery takes place when the goods are still loaded on the means of transportation provided by the exporter, at their destination.
FCA
The exporter delivers the goods to a carrier selected by the importer.
DDP
The exporter handles everything for the importer, including shipment to the customer's plant and import customs clearance.
CIF
The exporter is responsible for the goods until they are placed on the ship and for pre-paying the ocean freight and marine cargo insurance until the port of destination.
CFR
The exporter is responsible for the goods until they are placed on the ship and for pre-paying the ocean freight.
FOB
The exporter is responsible for the goods until they are placed on the ship.
FAS
The exporter is responsible to bring the goods to the port, alongside a ship designated by the importer, at which time the responsibility for the shipment shifts to the importer.
EXW
The exporter only has the obligation to place the goods at the disposal of the buyer and to render every assistance in the export of the goods.
transfer of responsibility
The point at which the exporter ceases to be responsible for the goods.
transfer of title
The point in time at which the ownership of the goods changes from the exporter to the importer.
CIP
This term cannot be used by importers from countries that prohibit them from purchasing insurance abroad.
DAT
This term is best for intermodal container shipping.
EXW
This term is recommended for small packet shipping.
EXW
This term is the most "labor intensive" for the importer.
DAP
This term replaced DDU (Delivered Duty Unpaid).
DDP
This term will have the highest invoiced amount for the same cargo.
DAP
This term will likely be substituted for DAT if the transfer of the responsibility occurs in the importing country not at a terminal.
A P&I club is a mutual form of insurance.
True
A bank guarantee payable at first request is one in which the beneficiary does not have to provide any evidence that the terms of the underlying contract between the contractor and the beneficiary have not been met. T/F
True
A date draft transaction solves one of the problems of documentary collection in general: the date at which the importer will endorse the draft. T/F
True
A procurement card is conceptually similar to a consumer credit card. T/F
True
Air cargo can be damaged during flight because cargo pilots do not maneuver or fly as gently as passenger pilots do.
True
All marine insurance policies carry a general average clause.
True
An options market hedge is, in effect, an insurance policy against unfavorable exchange rate fluctuations.
True
Because some of their cash must be frozen at the issuing bank to guarantee payment, importers often prefer terms other than those of a letter of credit. T/F
True
British "All Risks" policies and American "All Risks" policies are different from each other.
True
Dangerous cargo can only travel by ocean, not by air.
True
Documents transferred through SWIFT have the same value as original paper documents.
True
For Institute Marine Cargo Clauses Coverage B, losses due to bad weather are not covered.
True
For an exporter, there is a strategic advantage in quoting prices in the importer's currency and reducing the currency fluctuation risk with a forward market hedge or a money market hedge.
True
In fundamental forecasting methods, the exchange rate of a specific currency is the dependent variable.
True
It is often a disadvantage to request a letter of credit because of the costs (and the cumbersome process) associated with it. T/F
True
It is possible to add a draft to a letter of credit. T/F
True
Lloyd's of London acts as a market through which unusual risks are insured.
True
Lloyd's of London originally began in a coffee shop.
True
One of the most complex areas of international logistics is international insurance
True
Since a draft (or a bill of exchange) is a legal document in the importing country, the courts in the importing country would consider non-payment by an importer as a domestic issue. T/F
True
Some currencies are traded in the futures' market as "commodities."
True
Technical forecasting methods are essentially based upon time-series analysis.
True
The Institute Marine Cargo Clauses Coverage A, B, and C are governed by British law.
True
The International Fisher effect is the observation that exchange rates reflect the differences between nominal interest rates in different countries.
True
The Japanese government has been known to keep the value of the yen down in order to boost the Japanese economy through under-valued exports.
True
The concept of general average is exclusively used in marine insurance.
True
The greater the exposure, the more secure terms of payment should be. T/F
True
The responsibilities of the presenting bank in the importing country generally stop at notifying the importer that the documents have arrived and at requesting that the importer endorse the draft or at requesting payment before releasing the documents. This is called trade acceptance. T/F
True
The standards for airfreight packing are much less stringent than for an ocean shipment.
True
The stated goal of the European Union is to eventually transform the euro to be a challenger to the U.S. dollar in its role as a preferred third-country currency.
True
United States law prohibits bank guarantees. T/F
True
Warehouse-to-Warehouse coverage is an extension to the traditional All Risks, With Average, and Free of Particular Average policies. It is an integral part of the Institute Marine Cargo Clause policies for Coverages A, B, and C, for which it is called "Transit" clause.
True
DDP
Under this term, receiving the cargo will not be much different for the importer from receiving a domestic shipment.
A letter of credit usually requires
a Certificate of Insurance.
Insurance coverage designed to fill the gap between what an importer would like to have covered under its open cargo policy and what is covered under its supplier's CIF or CIP coverage is called
a Difference in Conditions coverage
Insurance coverage designed to fill the gap between what an importer would like to have covered under its open cargo policy and what is covered under its supplier's CIF or CIP coverage is called
a Difference in Conditions coverage.
Marine cargo insurance can be purchased from
a barratry. MSC Carla. COGSA. NONE OF THE ABOVE (insurance agent/freight forwarder)
In addition to being a contract of carriage and a receipt for the goods, an ocean bill of lading is 1)a certificate of title. 2)a substitute for a Certificate of Insurance. 3)an Incoterm. 4)an insurance contract 5)a packing list for the carrier.
a certificate of title.
"Warehouse-to-Warehouse" coverage is an extension to the traditional
a. All Risks policy. d. All of the above b. With Average policy. e. None of the above c. Free of Particular Average policy. ANS: D
The mathematical representation (1 + real interest rate) x (1 + inflation rate) = 1 + nominal interest rate is of what theory of exchange rate determination?
a. Fisher effect
The following mathematical expression Ft+1(et) =S(et+1) is of what theory of exchange rate determination?
a. Interest Rate Parity d. Big Mac Index b. Fisher effect e. None of the above c. Purchasing Power Parity ANS: E
Marine cargo insurance can be purchased from
a. a barratry. b. MSC Carla. c. COGSA. d. All of the above e. None of the above ANS: E
The bill of lading serves as a. a certificate of title to transported goods. d. All of the above b. a substitute for a letter of credit. e. None of the above c. a certificate of an open account.
a. a certificate of title to transported goods.
A forward market hedge
a. allows a company to protect itself from currency fluctuations. b. may involve selling forward a future receivable in a foreign currency. c. may involve purchasing forward the currency necessary to cover a foreign payable. Answer: D All of the above
An exporter can conduct its international business in a manner similar to the way it and most companies conduct domestic business by using a. an open account. d. cash in advance. b. a letter of credit. e. None of the above c. a documentary collection.
a. an open account.
Most of the ships that sink each year
a. are older ships. b. are bulk ships. c. are ships flying third world countries' flags. ANS: D all of the above
Of companies that will successfully and regularly retain the risk of currency fluctuation are those that
a. are very large traders, sophisticated in international finance.
SDRs of the International Monetary Fund can be used in exchanges
a. as an artificial currency.
At Lloyd's, the individuals assuming (insuring) risks are grouped together in
a. associations. d. Baileys. b. underwriting instruments. e. None of the above c. agencies. ANS: E
More companies are selling insurance on an "open-account" basis because
a. countries are providing more export subsidies. b. the nationalization of Compagnie Francaise d'Assurance pour le Commerce Exterieur has allowed more policies to be issued. c. the World Trade Organization is now encouraging the practice. ANS: E d. All of the above e. None of the above
In attempting a credit check of a foreign firm, a basic problem is a. deciphering the business's organization and name. d. All of the above b. most international banks are corrupt. e. None of the above c. most countries avoid international trade.
a. deciphering the business's organization and name.
Among the companies that are exposed to risks in currency fluctuation are
a. firms that do not evaluate international currency transaction risks clearly. b. firms that do not follow a specific policy on currency exchange. c. firms that have management that is not well-versed in the intricacies of international trade. ANS: D All of the above
Coverage A of the Institute Marine Cargo Clauses is the maximum coverage an exporter or importer would normally need to purchase
a. for most trade lanes of the world. b. for shipments from one developed country to another. c. for shipments that stay away from political hot spots of the world. ANS: D
According to John Waite, chief surveyor of the Salvage Association, the biggest hazard(s) for container ships is/are
a. foreign exchange exposure. d. b. risk retention. e. c. leakage. ANS: E none of the above
In the United States, the Wall Street Journal publishes the forward rates for the currencies of _____ countries
a. four
In the United States, the Wall Street Journal publishes the forward rates for the currencies of _____ countries.
a. four
As a theory of exchange rate determination, the Fisher effect
a. holds that exchange rates should reflect the price differences of each and every product between countries. b. reflects the Big Mac Index. c. links the forward exchange rate of a foreign currency to its spot rate. Answer: E.None of the above
International exchange rates began to float
a. in 1971. b. at the end of the gold standard. c. and it changed the role of the International Monetary Fund. ANS: D d. All of the above
S.R. & C. C. coverage
a. includes direct physical damage to the insured goods. b. does not include incidental damage caused by delay to market. c. does not cover financial losses that accompany a delay in the sale of cargo. ANS: D all of the above
In an options market hedge there is the option to sell or purchase certain currencies at a certain exchange rate either on or before a certain date. The agreed-upon exchange rate is called the
a. international leverage. b. trade dimension. c. leveraging currency. d. transaction exposure. ANS: e. None of the above
A special cargo policy
a. is an insurance policy that covers only one shipment. b. allows a firm to purchase coverage that specifically fits a particular shipment. c. results in cumbersome efforts to purchase insurance for each shipment. ANS: D all of the above
Market-based forecasting of exchange rates
a. is based on the premise that "the market knows best." b. attempts to capture the collective knowledge of sophisticated speculators in the future spot rate of a currency. c. does not take into account government interventions. ANS: D All of the above
The most commonly used terms of payment for a customer located in the Middle East are a. letters of credit. d. cash in advance terms. b. open accounts. e. None of the above c. documentary collections.
a. letters of credit.
Under an American Conditions Free of Particular Average policy,
a. partial losses are covered if they happen on the same voyage as a fire. b. there is excellent coverage for containerized or break-bulk cargo. c. partial losses are not covered if they result directly from a fire. ANS: E d. it would be enough to cover the minimum insurance requirements of a CIF or CIP shipment. e. None of the above
In its absolute form, the exchange rate determination theory of Purchasing Power Parity
a. says that exchange rates should reflect the d. price differences of each and every product between countries. b. says that the exchange rate should e. equalize price differences of similar products between countries. c. is impossible to achieve. ANS: D All of the above
A bank guarantee that is requested by a beneficiary to ensure that the contractor is bidding in good faith and will enter the contract if awarded is called a(n) a. tender guarantee or bid guarantee. d. advance payment guarantee or repayment guarantee. b. performance guarantee. e. None of the above c. maintenance guarantee
a. tender guarantee or bid guarantee
When a letter of credit and the required documents do not match perfectly, it is normally the role of the ____________________ bank to request an amendment to the letter of credit from the bank of the other party.
advising
EDI is 1)Electronic Data Interchange. 2)an electronic exchange of documents from computer to computer. 3)based upon a legal agreement between sender and recipient. 4)all of the above 5)none of the above
all of the above
Which of the following pieces of information does an international commercial invoice contain? 1)Incoterms 2)a precise description of the product 3)terms of payment 4)weight and measurements of the product 5)all of the above
all of the above
FOB is 1)Free On Board. 2)an Incoterms® Rule that can be used for any merchandise. 3)an Incoterms® Rule specifically designed for ocean transportation. 4) all the above 5) none of the above
all the above
The choice of a proper Incoterms® Rule is a critical decision because 1)it can be an integral part of export strategy. 2)it is linked to the level of customer service the firm is attempting to provide. 3)it can be a competitive advantage. 4) all the above 5) none of the above
all the above
The document that corresponds clearly to the transfer of responsibility for a Free Carrier shipment is the receipt given by the carrier to the exporter. This receipt can be 1)a sea waybill. 2)an air waybill. 3)a multi-modal bill of lading. 4) all of the above 5) none of the above
all the above
Even when validated export licenses are not required, exporters are responsible for determining if there are "red flags" in a transaction, such as 1)a cash sale for a product generally purchased on credit terms. 2)the product is sold to a company that does not appear to be in the exporter's main line of business. 3)the importer appears on the BIS's "List of Specially Designated Nationals." 4)any of the above 5)none of the above
any of the above
In terms regarding letters of credit, the importer is called the ____________________
applicant
Premiums in an open ocean cargo policy
are based upon the value of shipments made under the policy.
Premiums in an open ocean cargo policy
are based upon the value of shipments made under the policy.
Most of the ships that sink each year
are older ships are bulk ships are ships flying third world countries' flags
Most of the ships that sink each year
are older ships. are bulk ships. are ships flying third world countries' flags. ALL OF THE ABOVE
Goods shipped "under deck"
are stowed inside the ship.
Of companies that will successfully and regularly retain the risk of currency fluctuation are those that
are very large traders, sophisticated in international finance.
Airfreight insurance policies
are written as "All Risks" policies.
SDRs of the International Monetary Fund can be used in exchanges
as an artificial currency
A major financial problem occurred for Lloyd's of London due to its coverage of
asbestos
A major financial problem occurred for Lloyd's of London due to its coverage of
asbestos.
At Lloyd's, the individuals assuming (insuring) risks are grouped together in
associations. underwriting instruments. agencies. Baileys. NONE OF THE ABOVE
A Certificate of Certification 1)defines the technical characteristics of a good before it can be imported. 2)may be written by an independent company. 3)may be written by a trade association. 4)attests that the goods meet the technical requirements of the importing country. 5)attests that the goods meet the technical requirements of the exporting country.
attests that the goods meet the technical requirements of the importing country.
The instruction letter is part of the documentary collection a. that is not recognized in the United States. d. All of the above b. in which the exporter, through the remitting bank, tells the presenting bank what it is expected to accomplish. e. None of the above c. that is not recognized in the European Union
b. in which the exporter, through the remitting bank, tells the presenting bank what it is expected to accomplish.
When a company is engaged in an international transaction and agrees to use a foreign currency to conduct the transaction
b. it is exposed to a certain amount of risk.
The risk(s) that an exporter takes in requesting cash in advance as a means of payment is/are a. fluctuations in the exchange rate. d. All of the above b. it puts the exporter at a competitive disadvantage. e. None of the above c. it can increase inventory stockouts.
b. it puts the exporter at a competitive disadvantage.
In the European Union, it has become difficult to conduct business on any payment terms other than a. cash in advance. d. factoring. b. open accounts. e. None of the above c. letters of credit
b. open accounts.
Historical exchange rate data can easily be obtained from
b. the Bank of Canada.
In a letter of credit, the most important aspect is a. the creditworthiness of the importer. d. the promise of eventually changing to an open account. b. the documentation of the transaction. e. None of the above c. the creditworthiness of the exporter.
b. the documentation of the transaction
In valuing a currency, the direct quote is
b. the value of the foreign currency expressed in units of the domestic currency.
In valuing a currency, the direct quote is
b. the value of the foreign currency expressed in units of the domestic currency.
The risk resulting from possible fluctuations in currency exchange rates is called
b. transaction exposure.
A money market hedge consists of using the ____________________ system of the country of the currency in which the receivable or the payable is going to be paid.
banking
The rules of the URR 725 of the International Chamber of Commerce apply to ___________________ rather than to exporters.
banks
Among country risks in international trade are labor issues. For instance, _____ has/have a strike almost every year at its/their ports. a. Chad d. All of the above b. Paraguay e. None of the above c. Japan
c. Japan
SWIFT stands for
c. Society for Worldwide Interbank Financial Telecommunications.
Stable countries representing the greatest percentage of world trade all have _____ currencies
c. floating
Stable countries representing the greatest percentage of world trade all have _____ currencies.
c. floating
One strategy a company can follow to protect itself from currency fluctuations is use of
c. forward market hedges.
The International Bank for Reconstruction
c. is also known as the World Bank.
The importer's bank is called the a. applicant. d. advising bank. b. beneficiary. e. None of the above c. issuing bank.
c. issuing bank.
An aval a. is a used only in open accounts. d. All of the above b. means funds are available. e. None of the above c. makes the presenting bank a co-signer of a draft
c. makes the presenting bank a co-signer of a draft
Among the following terms of payment, which is the one which is the most customer-friendly and still protects the exporter from the risk of non-payment? a. a letter of credit d. international forfeiting b. open account e. None of the above c. open account with credit insurance
c. open account with credit insurance
The UPC 600 is a. used only in open accounts. d. All of the above b. normally not used when a letter of credit is issued through the SWIFT network. e. None of the above c. the Universal Customs and Practice for Documentary Credit, 2007 revision, Publication 600 of the International Chamber of Commerce
c. the Universal Customs and Practice for Documentary Credit, 2007 revision, Publication 600 of the International Chamber of Commerce
In the United States, the Federal Reserve System technically fulfills the role of being a ____________________.
central bank
End-Use Certificates 1)are provided by the governments of the exporting country. 2)certify that the product is going to be used for a legitimate purpose. 3)must be signed by the exporter's chamber of commerce. 4)are certified by the carrier of the goods. 5)are provided by the exporter to the importing country's authorities.
certify that the product is going to be used for a legitimate purpose.
One of the functions of a nation's central bank is that of a check ____________________.
clearinghouse
More companies are selling insurance on an "open-account" basis because
countries are providing more export subsidies. the nationalization of Compagnie Francaise d'Assurance pour le Commerce Exterieur has allowed more policies to be issued. the World Trade Organization is now encouraging the practice. NONE OF THE ABOVE
The euro was first created as an artificial
currency
The European Monetary System (EMS), which gave rise to the euro, was designed so that the currencies of member countries would have to stay within a few points of each other's value. This is an example of a floating ____________________.
currency bloc
If an exporter chooses to quote in his country's currency, or quotes in the importer's country currency and hedges with a money market hedge, it is to minimize his ____________________ risks.
currency fluctuation, currency
A standby letter of credit is similar to a "simple" letter of credit except for a. it generally has a much longer validity period. d. All of the above b. it usually applies to more than one shipment from the exporter to the importer. e. None of the above c. it allows the exporter to extend an open account to the importer, using the letter of credit only if the importer doesn't meet its obligations.
d. All of the above
Among other reasons, international transactions are perceived to have more risk of non-payment because of a. a lack of credit information. d. All of the above b. a lack of personal contact. e. None of the above c. no easy legal recourse
d. All of the above
International commercial risk can be evaluated by a. credit report companies. d. All of the above b. factoring houses. e. None of the above c. some accounting firms, insurance companies, and banks.
d. All of the above
International factoring a. is more complicated than domestic factoring. d. All of the above b. can be used to extend credit beyond what the exporter can normally afford. e. None of the above c. often involves factoring firms in both the exporting and importing countries.
d. All of the above
A forward market hedge
d. All of the above (a. allows a company to protect itself from currency fluctuations. b. may involve selling forward a future receivable in a foreign currency. c. may involve purchasing forward the currency necessary to cover a foreign payable)
Among the companies that are exposed to risks in currency fluctuation are
d. All of the above (a. firms that do not evaluate international currency transaction risks clearly. b. firms that do not follow a specific policy on currency exchange. c. firms that have management that is not well-versed in the intricacies of international trade)
International exchange rates began to float
d. All of the above (a. in 1971. b. at the end of the gold standard. c. and it changed the role of the International Monetary Fund)
In its absolute form, the exchange rate determination theory of Purchasing Power Parity
d. All of the above (a. says that exchange rates should reflect the price differences of each and every product between countries. b. says that the exchange rate should equalize price differences of similar products between countries. c. is impossible to achieve)
Credit terms can be considerably lengthened through a. a letter of credit. d. international forfeiting. b. trade acceptance. e. None of the above c. banker's acceptance.
d. international forfeiting
A "Sue and Labor" clause
directs the shipper to act in the best interest of the insurance company when a loss occurs.
A "Sue and Labor" clause
directs the shipper to act in the best interest of the insurance company when a loss occurs.
Under the Interest Rate Parity theory of exchange rate determination, the forward exchange rate should be expressed as a ____________________ if the foreign country is experiencing higher nominal interest rates than the domestic country.
discount
The issuing bank's promise to pay is contingent upon the proper ____________________ being in order.
documents
A ____________________ is an instrument that legally binds the importer to pay within a certain period of time (and allows the exporter to grant commercial credit to the importer whenever it is deemed necessary).
draft
Following negotiations on a transaction which result in use of a letter of credit for payment, the next step is for the exporter to a. ship the goods to the importer. d. All of the above b. ask the advising bank to open a letter of credit. e. None of the above c. make a security deposit in the issuing bank.
e. None of the above
SWIFT stands for a. Southwestern International Fund Transfers. d. Society for Worldwide Institutional Transfers. b. Sales World Institutional Financial Telecommunications. e. None of the above c. Serving-the-World Institutional Financial Transactions.
e. None of the above
Sometimes a third bank, in addition to the issuing bank and the advising bank, becomes involved with a letter of credit. This bank is called a a. primary bank. d. amending bank. b. secondary bank. e. None of the above c. intermediary bank.
e. None of the above
The following mathematical expression Ft + 1(et) = S(et + 1) is of what theory of exchange rate determination?
e. None of the above (a. Interest Rate Parity b. Fisher effect c. Purchasing Power Parity d. Big Mac Index)
In an options market hedge there is the option to sell or purchase certain currencies at a certain exchange rate either on or before a certain date. The agreed-upon exchange rate is called the
e. None of the above (a. international leverage. b. trade dimension. c. leveraging currency. d. transaction exposure)
A government will use a(n) _____ to attempt to control the export of national treasures or antiques. 1) export license 2) consular invoice 3) Uniform Commercial Code 4) duty 5) pro forma invoice
export license
The choice of the Incoterms® Rule is almost always the decision of the 1) importer 2) agent 3) exporter 4) distributor 5) none of the above
exporter
The risk a company faces in a transaction that may have fluctuations in foreign currency exchange rates is called transaction ____________________.
exposure
T/F A Certificate of Origin must be signed by the importer's chamber of commerce.
false
T/F A manifest is an internal document of the shipping company that is not examined by government entities.
false
T/F A shipment leaving Denver, Colorado, for Kobe, Japan, could be sold under an FOB Incoterms® Rule.
false
T/F A specialized commercial invoice is considered a trade barrier.
false
T/F An Incoterms® Rule expressed as "CIP, 126 Strada Molitor, Bucharest, Romania, Incoterms® Rules 2010" means that under Incoterms® Rules as of 2010, the goods are "Carriage and Insurance Paid" to that address in Bucharest, where the importer will take ownership of them.
false
T/F An advantage of the Free Alongside Ship Incoterms® Rule is the thorough documentation of the receipt of goods at a port holding area or to the quay alongside the ship.
false
T/F An experienced exporter knows that the U.S. government almost always checks the paperwork that the exporter provides to the importer.
false
T/F An import license is usually provided by an independent laboratory or independent inspection company attesting to composition of certain shipped products.
false
T/F Bolero does not use a shared EDI network, but is proprietary.
false
T/F Bolero is an international document transmission system that offers payment capability.
false
T/F Export quotas can be used to control scarce resources or prices of products for which an exporting country faces heavy competition.
false
T/F In planning their export strategy, companies generally determine which Incoterms® Rule they will use on a case-by-case basis.
false
T/F Incoterms® Rules are arbitrated by the International Trade Commission.
false
T/F It is always best to use only one term of trade in a quote to a potential customer so that there is no possible confusion.
false
T/F Most End-Use Certificates are provided by the governments of exporting countries.
false
T/F The DAP Incoterms® Rule means "Deliver At Port."
false
T/F The EXW Incoterms® Rule is mostly used for bulk shipments of commodities where the parties wish to have the exporter pay for the loading of the ship.
false
T/F The Incoterms® Rule CPT means "Cargo Placed at Terminal."
false
T/F The main billing document in a shipment is the pro forma invoice.
false
T/F Under Incoterms® Rule FOB, transfer of responsibility for cargo from importer to exporter is at the ship's rail as the cargo is loaded onto the ship
false
T/F Under the Cost, Insurance, and Freight Incoterms® Rule, the importer takes responsibility for the goods when they arrive at the importer's port.
false
T/F Under the DAT Incoterms® Rule, the exporter is responsible for the costs of transportation to the goods' final destination and for the costs of clearing customs.
false
T/F Under the DDP Incoterms® Rule, the importer takes control of the goods in the city where the exporter is located.
false
T/F Under the FCA Incoterms® Rule, it is the responsibility of the importer to arrange and pay for the loading of the goods.
false
T/F Under the FOB Incoterms® Rule, in countries where export authorities require a pre-shipment inspection, the importer must pay for it.
false
According to John Waite, chief surveyor of the Salvage Association, the biggest hazard(s) for container ships is/are
fire
Coverage A of the Institute Marine Cargo Clauses is the maximum coverage an exporter or importer would normally need to purchase
for most trade lanes of the world. for shipments from one developed country to another. for shipments that stay away from political hot spots of the world.
Coverage A of the Institute Marine Cargo Clauses is the maximum coverage an exporter or importer would normally need to purchase
for most trade lanes of the world. for shipments from one developed country to another. for shipments that stay away from political hot spots of the world. ALL OF THE ABOVE
According to John Waite, chief surveyor of the Salvage Association, the biggest hazard(s) for container ships is/are
foreign exchange exposure. risk retention. leakage. NONE OF THE ABOVE
One strategy a company can follow to protect itself from currency fluctuations is use of
forward market hedges.
A typical container will be handled _____ times in each of the ports of departure and destination.
four to six
Marine cargo insurance can be purchased from
freight forwarder insurance agent
An exporter in a developing country sells under CIF terms to an importer in a developed country. The exporter provides the minimum required insurance coverage. If there is a loss, the importer would
have to file a claim with an insurer in the developing country.
In a cash-in-advance transaction, all risk is transferred to the ____________________.
importer
Under the Delivered Duty Paid Incoterms® Rule, unloading costs are borne by the 1) railroad 2) ship line 3) exporter 4) harbor 5) importer
importer
While on the surface Incoterms® Rules determine who pays what when, ultimately the _____ directly or indirectly pay(s) the costs of transportation and international shipping. 1) importer 2) exporter 3) customs office 4) all of the above 5) none of the above
importer
An exporter writing a quote for a customer located in a developed country can expect that several of his competitors will quote in the ____________________ currency
importer's
S.R. & C. C. coverage
includes direct physical damage to the insured goods. does not include incidental damage caused by delay to market. does not cover financial losses that accompany a delay in the sale of cargo.
S.R. & C. C. coverage
includes direct physical damage to the insured goods. does not include incidental damage caused by delay to market. does not cover financial losses that accompany a delay in the sale of cargo. ALL OF THE ABOVE
Because of the risks associated with open-account transactions, when an exporter is forced for competitive reasons to offer an open account, the exporter should acquire credit___________________ on those sales.
insurance
Incoterms® Rules stands for 1)terminal incorporation procedures. 2)in-country termination. 3)international company terminology. 4)intercontinental term standards. 5)international commerce terms.
international commerce terms.
Institute for Marine Cargo Clauses Coverage B
is a "named-perils" policy.
In most cases, an intermodal bill of lading 1)is illegal. 2)is an Incoterms® Rule. 3)is a straight bill of lading. 4) is regulated by the International Maritime Dangerous Goods Code. 5)is a negotiable bill of lading.
is a straight bill of lading.
The International Bank for Reconstruction
is also known as the World Bank.
An air waybill 1)is always straight. 2)is also used in ocean transportation. 3)serves as an individual validated export license. 4)can serve as a shipper's export declaration. 5)is a negotiable bill of lading
is always straight.
A special cargo policy
is an insurance policy that covers only one shipment. allows a firm to purchase coverage that specifically fits a particular shipment. results in cumbersome efforts to purchase insurance for each shipment. ALL OF THE ABOVE
A special cargo policy
is an insurance policy that covers only one shipment. allows a firm to purchase coverage that specifically fits a particular shipment. results in cumbersome efforts to purchase insurance for each shipment.
Institute Marine Cargo Clauses Coverage C
is required by Incoterms CIF and CIP
Institute Marine Cargo Clauses Coverage C
is required by Incoterms CIF and CIP.
Delivered At Place is an Incoterms® Rule designed specifically for 1) ocean transportation 2) land transportation 3) air transportation 4) barge transportation 5)it can be used for any means of transportation.
it can be used for any means of transportation.
When a company is engaged in an international transaction and agrees to use a foreign currency to conduct the transaction
it is exposed to a certain amount of risk.
More companies are selling their goods on an "open-account" basis because
it is possible to purchase credit insurance to cover the risk of non-payment.
The Incoterms® Rule EXW specifies what regarding delivery? 1)the mode of transportation for delivery 2)who pays for delivery 3)who buys insurance for delivery 4)it lets the exporter decide when the goods are delivered 5) none of the above
it lets the exporter decide when the goods are delivered
The United States export policy is mostly concerned about 1)keeping some military technologies away from some countries. 2)stopping exports of non-essential items to countries that cannot afford them. 3)regulating exports to countries that have strong import regulations. 4)preventing the spread of agricultural diseases and pests outside of the U.S. 5)preventing the sale of intellectual property to countries that do not protect it.
keeping some military technologies away from some countries.
The less developed an area of the world is, the more likely it is that an exporter will use a____________________ term of payment
letter of credit, secure
For an American exporter, one way to avoid delays in the port of departure in the United States is to 1)make sure that the Shipper's Export Declaration has been filed on time. 2)make sure that the number of original invoices and bills of lading is at least five. 3)make sure that the invoice has been visa-ed by the consulate of the importing country. 4)make sure that the packing list has been written in the language of the importing country. 5)make sure that the carrier has signed the bill of lading
make sure that the Shipper's Export Declaration has been filed on time.
Export taxes 1)protect importers from fraudulent exporters. 2)are certified by the exporter's chamber of commerce. 3)may be used when the shipped goods are minerals in short supply, or when the product has been heavily subsidized by the government. 4)are collected by many governments in an attempt to control exports. 5)are only collected when the country suspects that exporters are fraudulently exporting prohibited goods.
may be used when the shipped goods are minerals in short supply, or when the product has been heavily subsidized by the government.
As the Wall Street Journal quotes it, the exchange rate is the ____________________ between the bid and ask rates for exchanges of a value greater than $1,000,000 between banks.
mid-point
The pro forma invoice 1)fulfills the same functions as a commercial invoice. 2)must be written with extreme care to avoid discrepancies between the letter of credit and the commercial invoice. 3)does not have an expiration date. 4)is written in such a way that the importer knows that it is subject to change. 5)is a certificate of title for the goods.
must be written with extreme care to avoid discrepancies between the letter of credit and the commercial invoice.
The most commonly used term of payment in the European Union is ____________________.
open account
Under an American Conditions Free of Particular Average policy,
partial losses are covered if they happen on the same voyage as a fire. there is excellent coverage for containerized or break-bulk cargo. partial losses are not covered if they result directly from a fire. it would be enough to cover the minimum insurance requirements of a CIF or CIP shipment. NONE OF THE ABOVE
For an exporter, one way to avoid having to pay for amendments to a letter of credit is to 1)prepare the packing list particularly carefully. 2)make sure that the Shipper's Export Declaration has been filed electronically. 3)prepare the pro forma invoice particularly carefully 4)make sure that the carrier provides an accurate manifest 5)prepare the manifest very carefully.
prepare the pro forma invoice particularly carefully
In documentary collection activity, the exporter's bank is called the ____________________ bank.
remitting
Under the Incoterms® Rule FOB, responsibility for the cargo 1)shifts from exporter to importer at the ship's rail. 2)shifts from exporter to importer when the goods are placed on the exporter's loading dock. 3)shifts from exporter to importer when the goods are loaded onto the ship in the country from which the goods are leaving. 4)shifts from exporter to importer when the importer pays the exporter. 5) none of the above
shifts from exporter to importer when the goods are loaded onto the ship in the country from which the goods are leaving.
A problem with market-based forecasting is that the "wisdom" of the market may be skewed by ____________________ who may include people motivated by entirely different motives than the actual purchase and delivery of a currency.
speculators
Coverage A of the Institute Marine Cargo Clauses requires a special endorsement to cover
strikes and other civil disturbances
Coverage A of the Institute Marine Cargo Clauses requires a special endorsement to cover
strikes and other civil disturbances.
SDR, an artificial currency, is designed to ____________________ the U.S. dollar in its role as the international currency.
supplement
At Lloyd's, the individuals assuming (insuring) risks are grouped together in
syndicates.
Historical exchange rate data can easily be obtained from
the Bank of Canada.
The sentence "This merchandise licensed by U.S. for ultimate destination [country]. Diversion contrary to U.S. Law prohibited" is 1)a Commerce Control List. 2)the Fenwick Anti-Terrorist Amendment of the Export Administration Act. 3)the "List of Specially Designated Nationals." 4)the Denied Person's List. 5)the Destination Control Statement
the Destination Control Statement
Which of the following regulate shipments of dangerous goods by ocean? 1)the SWIFT 2)the U.S. Code of Federal Regulations 3)the International Maritime Dangerous Goods Code 4)the Export Administration Regulations 5)the International Chamber of Commerce
the International Maritime Dangerous Goods Code
Under the Free On Board Incoterms® Rule, if a piece of cargo breaks loose while it is loaded onto the ship, it becomes the responsibility of 1) the exporter 2) the importer 3) the harbor master 4) all of the above 4) none of the above
the exporter
Under two of Incoterms® Rules, ________ has to provide the importer with a Certificate of Insurance. 1)the insurance company of the exporter. 2)the carrier. 3)the Customs authorities in the exporting country. 4)the exporter 5)the Customs authorities in the importing country.
the exporter
The part of a trip during which cargo is at most risk for theft is
the inland leg
The part of a trip during which cargo is at most risk for theft is
the inland leg.
Under the Cost, Insurance, and Freight Incoterms® Rule, 1)the importer must pre-pay the insurance. 2)the insurance must total at least 110 percent of the value of the goods. 3)the importer pays all shipping costs, including on carriage. 4) All of the above 5) None of the above
the insurance must total at least 110 percent of the value of the goods.
One of the differences between the Delivered At Terminal Incoterms® Rule and the Delivered At Place Incoterms® Rule 1)the unloading costs are borne by the exporter under DAP and by the importer under DAT. 2) None of the above 3)the unloading costs are borne by the exporter under DAT and by the importer under DAP. 4)both importer and exporter share unloading costs in both DAP and DAT. 5)unloading costs are borne by the cargo owner in both DAP and DAT.
the unloading costs are borne by the exporter under DAT and by the importer under DAP.
In some cases, the exporter may want to grant some credit terms to the importer but still want some means to ensure it will be paid. In that case, it can request that the bank exchange documentation against a ____________________ draft in which the importer endorses to promise to pay within a certain time period.
time
Which of the following is not a reason for a country to require specific import documents? 1)to keep out shoddy goods. 2)to determine appropriate tariff classifications. 3)to help determine imported goods' values. 4)to assess the correct income tax. 5)to determine the country of origin of the goods.
to assess the correct income tax.
The risk resulting from possible fluctuations in currency exchange rates is called
transaction exposure.
T/F A Certificate of Manufacture is similar to a Certificate of Origin.
true
T/F A Phyto-Sanitary Certificate is for agricultural products and foodstuffs.
true
T/F A bill of lading is a fundamental international shipping document in ocean transportation.
true
T/F A bill of lading or equivalent document (air waybill, sea waybill, multi-modal bill of lading) acts as proof of delivery under the CIP Incoterms® Rule.
true
T/F A careful preparation of all of the documents by the exporter helps the importer tremendously when it is time to clear Customs
true
T/F A commercial invoice favored by countries attempting to accurately forecast needs for foreign currency is called a(n) consular invoice.
true
T/F A consular invoice can be considered a trade barrier.
true
T/F A consular invoice is a regular commercial invoice printed on stationery provided by a country and visa-ed by its consulate in the exporter's country.
true
T/F A country may use import documents to enact a protectionist policy.
true
T/F A detailed Shipper's Letter of Instruction can be critical in livestock shipments.
true
T/F A document sometimes requested by the importer that is signed by an independent third party attesting to authenticity and accuracy of a shipment is a Certificate of Inspection.
true
T/F A packing list always accompanies a shipment.
true
T/F A uniform bill of lading is used for inland transportation.
true
T/F A(n) import license is designed to prevent the import of non-essential or overly luxurious products in developing countries with a short supply of foreign currency.
true
T/F Among other things, tariff rates are determined based on the shipment's weight.
true
T/F An export license can be used by a country to control the outflow of certain goods.
true
T/F An express authorization by a given country's government to export a specific product before it is shipped is called a(n) export license.
true
T/F As far as the importer is concerned, under the DDP Incoterms® Rule, receiving an international shipment is no different that receiving a(n) domestic shipment.
true
T/F Conceptually, the CPT Incoterms® Rule is the same as the CFR Incoterms® Rule, except it applies to goods shipped by means other than ocean transport, or shipped by sea without being handed over at the port of departure.
true
T/F Export quotas can be used to control scarce resources or prices of products for which a country has a monopoly.
true
T/F Failure to have the correct number of original invoices and the proper paperwork can delay customs' clearance in the importing country.
true
T/F If the Shipper's Export Declaration, SED is not filed in time with U.S. Bureau of Customs and Border Protection, the shipment will not be allowed to leave the port of departure.
true
T/F One of the requirements for a U.S. shipper's export declaration is for exports valued at more than $2,500 per item category.
true
T/F The CFR Incoterms® Rule means "Cost and Freight."
true
T/F The Cost, Insurance, and Freight Incoterms® Rule is specifically designed for ocean transportation.
true
T/F The DAP and DAT Incoterms® Rules are new with the 2010 version of Incoterms® Rules.
true
T/F The Incoterms® Rule CPT means "Carriage Paid To."
true
T/F The Incoterms® Rule FAS means "Free Alongside Ship."
true
T/F The Shipper's Export Declaration is required for export parcels valued at more than $500 that are sent through the postal system.
true
T/F The United States requires a(n) Shipper's Export Declaration.
true
T/F The choice of an Incoterms® Rule, as well as the choice of the method of payment and of other related transaction alternatives, constitute an exporter's customer service strategy.
true
T/F The customer-focused exporter gives the importer a quote in which the importer can determine which Incoterms® Rule should govern the transaction.
true
T/F The invoice that corresponds to an actual shipment is called the commercial invoice.
true
T/F The least customer-friendly of the Incoterms® Rules in the EXW (Ex-Works) Incoterms® Rule.
true
T/F The more recently created Incoterms® Rules (DAP, DAT) tend to define the responsibilities of the exporter and those of the importer much better than the older (FAS, FOB, CIF) Incoterms® Rules.
true
T/F Under Incoterms® Rule FAS, the importer is the party responsible for loading the goods onto the carrier.
true
T/F Under the CFR Incoterms® Rule, if the pre-paid contract of carriage does not include the unloading of the ship, then the importer must pay for it.
true
T/F Under the CFR Incoterms® Rule, until the merchandise is placed onboard ship, it is the responsibility of the exporter, after that, of the importer.
true
T/F Under the CIF Incoterms® Rule, the proof of delivery is an ocean bill of lading or a sea waybill.
true
T/F Under the CPT Incoterms® Rule, the bill of lading can act as a proof of delivery from the carrier.
true
T/F Under the DAP Incoterms® Rule, the importer is responsible for unloading the goods from the carrier's truck, clearing customs, and paying for any inland transportation beyond the city of destination.
true
T/F Under the DAT Incoterms® Rule, the exporter is responsible for the goods until they arrive in the agreed-upon terminal in the port of departure or of destination.
true
T/F Under the FAS Incoterms® Rule, in countries where export authorities require a pre-shipment inspection, the exporter has to pay for it.
true
T/F Under the Free Carrier Incoterms® Rule, the exporter is responsible for clearing the merchandise for export.
true
T/F Variants to the CFR Incoterms® Rule were created to reflect which of the trade partners was responsible for unloading costs. When the exporter bears the costs, the term "CFR Landed" is used.
true
While a cash-in-advance transaction shows a lack of it, an open account demonstrates that the exporter has ____________________ toward the importer.
trust
At Lloyd's, the individuals assuming (insuring) risks have
unlimited liability
At Lloyd's, the individuals assuming (insuring) risks have
unlimited liability.
Incoterms® Rules determine 1)how much the agents commission will be. 2)which tasks will be performed by the exporter. 3)how much duty will be charged by the importing country. 4) all of the above 5) none of the above
which tasks will be performed by the exporter.