International Trade Finance

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Question 1
Free
True/False

Forfaiting meets Islamic finance practices.

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True

False

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Question 2
Free
Multiple Choice

International trade is more difficult and risky from the exporter's perspective than is domestic trade because

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A

the exporter may not be familiar with the buyer, and thus not know if the importer is a good credit risk.

B

if the merchandise is exported abroad and the buyer does not pay, it may prove difficult, if not impossible, for the exporter to have any legal recourse.

C

political instability makes it risky to ship merchandise abroad certain to parts of the world.

D

all of the above

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Question 3
Free
Multiple Choice

Conducting international trade transactions is difficult in comparison to domestic trades.Which of the following are false statements regarding this reality?

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A

Commercial and political risks enter into the equation, which are not factors in domestic trade.

B

It is important for a country to be competitively strong in international trade in order for its citizens to have the goods and services they need and demand.

C

It is generally the case that the costs of international trade outweigh the benefits.

D

All of the above are true statements

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Question 4
Free
Multiple Choice

A typical foreign trade transaction requires three basic documents:

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A

letter of credit, time draft, and bill of lading.

B

letter of credit, banker's acceptance, and bill of lading.

C

letter of credit, time draft, and a banker's acceptance.

D

none of the above

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Question 5
Free
Multiple Choice

A time draft can become a negotiable money market instrument called

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A

Eurodollars.

B

a banker's acceptance.

C

a letter of credit.

D

a bill of lading.

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Question 6
Multiple Choice

Forfaiting,in which a bank purchases at a discount from an importer a series of promissory notes in favor of an exporter,

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A
is a short-term form of trade financing.
B
is a medium-term form of trade financing.
C
is a long-term form of trade financing.
D
none of the above
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Question 7
Multiple Choice

When a bank purchases at a discount from an importer a series of promissory notes in favor of an exporter,this is called

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A
accounts receivable financing.
B
asset backed commercial paper.
C
discounting.
D
forfeiting.
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Question 8
Multiple Choice

The Export-Import Bank provides competitive assistance to U.S.exporters through

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A
direct loans to foreign importers.
B
loan guarantees.
C
credit insurance to U.S.exporters.
D
all of the above
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Question 9
Multiple Choice

Countertrade transactions are

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A
becoming obsolete as a means of conducting international trade transactions.
B
gaining renewed prominence as a means of conducting international trade transactions.
C
strictly a form of barter.
D
none of the above
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Question 10
Multiple Choice

There are several types of countertrade transactions:

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A
none of which involve the use of money.
B
in each type, the seller provides the buyer with goods or services in return for a reciprocal promise from the seller to purchase goods or services from the buyer.
C
in each type, the seller provides the buyer with goods or services in return for a reciprocal promise from the buyer to stand ready to sell goods or services to the buyer.
D
none of the above
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Question 11
Multiple Choice

The three basic documents needed in a foreign trade transaction are

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A
letter of credit, time draft, and proof of inspection.
B
letter of credit, time draft, and a bill of lading.
C
letter of credit, bill of lading, and insurance.
D
time draft, bill of lading, and a pro forma statement.
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Question 12
Multiple Choice

The primary methods of payment for foreign trades,ranked in the order of most secure to least secure for the exporter is

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A
open account, consignment, letter of credit/time draft, and cash in advance.
B
consignment, letter of credit/time draft, cash in advance, and open account.
C
cash in advance, letter of credit/ time draft, consignment, and open account.
D
cash in advance, letter of credit/ time draft, open account, and consignment.
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Question 13
Multiple Choice

A bill of lading

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A
is a document issued by the common carrier specifying that it has received the foods for shipment; it can serve as title to the goods.
B
later becomes a banker's acceptance.
C
is a time draft that calls for payment upon physical delivery of goods.
D
none of the above
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Question 14
Multiple Choice

A time draft

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A
is a document issued by the common carrier specifying that it has received the foods for shipment; it can serve as title to the goods.
B
later becomes a banker's acceptance.
C
written order instructing the importer or his agent that calls for payment the amount specified on its face on a certain date.
D
none of the above
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Question 15
Multiple Choice

A banker's acceptance is created when

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A
is a document issued by the common carrier specifying that it has received the foods for shipment; it can serve as title to the goods.
B
after taking title to the goods via a bill of lading, the importer's bank accepts the time draft.
C
a time draft that calls for payment upon physical delivery of goods matures.
D
none of the above
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Question 16
Multiple Choice

In a consignment sale

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A
the importer only pays the exporter once he sells the merchandise.
B
the exporter retains title to the merchandise that is shipped.
C
if the goods do not sell, the importer can return them to the exporter.
D
all of the above
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Question 17
Multiple Choice

Suppose the face amount of a promissory note is $1,000,000 and the importer's bank charges an acceptance commission of 1.5 percent.The note is for 60 days.Calculate the amount of the acceptance commission that the bank will charge.

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A
$997,500
B
$15,000 = $1,000,000(0.015)
C
$2,500
D
None of the above
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Question 18
Multiple Choice

The ________ sends a purchase order to the ________ . The ________ applies to his bank for a letter of credit.

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A
importer, exporter, exporter
B
exporter, importer, importer
C
importer, exporter, importer
D
exporter, importer, exporter
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Question 19
Multiple Choice

The ________ 's bank sends the letter of credit to the ________ 's bank.After sending the merchandise,the ________ gives the shipping documents and time draft to his bank.

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A
importer, exporter, exporter
B
exporter, importer, importer
C
importer, exporter, importer
D
exporter, importer, exporter
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Question 20
Multiple Choice

Banker's Acceptances usually have maturities ranging from

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A
30 to 180 days.
B
90 to 360 days.
C
1 year to 5 years.
D
over 5 years.
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