IBUS CH 16 QUIZ

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

False

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

False

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

False

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

False

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.

Foreign Credit Insurance Association (FCIA)

Which statement accurately describes an Export-Import (EXIM) Bank?

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

Which statement is characteristic of many novice exporters?

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.

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

True

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

True

Tahlia is interested in exporting. She is accompanying representatives of the U.S. Department of Commerce to London where she will meet with qualified agents, distributors, and customers to help her make contacts and explore export opportunities in London. Tahlia is participating in

a "best prospects" search.

A chemical company based in New York plans to expand operations into three European countries. The company is looking for help with the specific laws and documentation requirements for imports into these three countries. Who should the company hire to help with this task?

a customs broker

A counterpurchase occurs when

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

What intermediary is typically used to establish trust during an international trade transaction?

a reputable bank

Mica's company would like to sell its products to a company in Ecuador, but it fears that the company will not pay for the products in a timely manner. Instead of asking for cash, Mica's company decides to ask for a shipment of coffee and tobacco products in exchange for their products. What type of countertrade is Mica's company using?

barter

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

bill of exchange

Blaise works for a beverage manufacturing company. His company recently built a manufacturing facility in Ireland and agreed to take 15 percent of the beverages produced as partial payment over a 10-year period. What form of countertrade is his company pursuing?

buyback

A major advantage of countertrade is that it

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

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

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

A common difficulty that traders face when exporting goods or services to other countries is that

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

What is the main objective of the SCORE program administered by the SBA?

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