IFM_TB_ch19

Chapter 19: Financing International Trade Trade

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Chapter 19 Financing International Trade 1. Which of the follo followin wing g is a reason why why commerc commercial ial banks can facilitate facilitate internatio international nal trade? A) the exporter exporter may not not wish to accept credit credit risk of the the importer importer.. B) the goernm goernment ent may impose impose exchange exchange contracts contracts that preent payment payment by the importer importer to the exporter. !) the exporter exporter may need financing financing "ntil "ntil payment payment for the goods goods is receied receied.. #) all all of of the these se.. A$%W A$%W&' &'(( # . !onsider !onsider an exporter exporter that sells its its acco"nts receiable receiabless off to another another firm that become becomess responsible responsible for obtaining cash from the ario"s importers. *his reflects( A) acco"nts acco"nts recei receiabl ablee financi financing. ng. B) cons consig ignm nmen ent. t. !) fact factor orin ing. g. #) a lett letter er of of cred credit. it. A$%W A$%W&' &'(( ! 3. !onsider !onsider a bank that acknowledg acknowledges es that it will will make make payments payments on behalf behalf of a beer importer importer after the  beer is delie deliered red to to the importer importer.. *his *his reflects( reflects( A) acco"nts acco"nts recei receiabl ablee financi financing. ng. B) forf forfai aiti ting ng.. !) fact factor orin ing. g. #) a lett letter er of of cred credit. it. A$%W A$%W&' &'(( # +. !onsid !onsider er an importer importer that iss"es iss"es a promiss promissory ory note note to pay for the import imported ed capital capital goods goods oer a  period of fie years. *he notes are extended extended to an exporter who sells them at a disco"nt disco"nt to a bank. *his reflects( A) acco"nts acco"nts recei receiabl ablee financi financing. ng. B) forf forfai aiti ting ng.. !) fact factor orin ing. g. #) a lett letter er of of cred credit. it. A$%W A$%W&' &'(( B

9+  International Financial Management  ,. !onsider an exporter that is willing to send goods to the importer witho"t a g"aranteed payment by the bank. *he bank proides a loan to the exporter that is backed by the al"e of the exported goods. *his reflects( A) acco"nts receiable financing. B) forfaiting. !) factoring. #) a letter of credit. A$%W&'( A -. A) B) !) #)

$!s can "se /////// to sell their existing acco"nts receiable as a means of obtaining cash. factoring a bill of lading a banker0s acceptance a letter of credit

A$%W&'( A . *he /////// was established in 193+ with the intention to facilitate %oiet2American trade. A) #omestic nternational %ales !orporation 4#%!) B) 5riate &xport 6"nding !orporation 45&6!7) !) &xport2mport Bank  #) 6oreign !redit ns"rance Association 46!A) A$%W&'( ! 8. A /////// proides a s"mmary of freight charges and coneys title to the merchandise. A) letter of credit B) banker0s acceptance !) bill of lading #) bill of exchange A$%W&'( ! 9. According to the text international trade actiity has generally /////// oer time. *his sho"ld ca"se the pop"larity of trade finance techni:"es to /////// oer time. A) increased; increase B) increased; decrease !) decreased; increase #) decreased; decrease A$%W&'( A

Chapter 19: Financing International Trade

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1.%.? A) working capital g"arantee program. B) proect finance loan program. !) direct loan program. #) the foreign sales corporation program. A$%W&'( # 18. Who bears the payment risk in a letter of credit? A) the exporter. B) the importer. !) the iss"ing bank. #) both the exporter and importer. A$%W&'( ! 19. !o"ntertrade represents foreign trade( A) restrictions imposed by the goernment on imports from another co"ntry. B) restrictions imposed by the goernment on exports sent from the co"ntry. !) transactions that force the sales of goods of one co"ntry to be linked to the p"rchase or  exchange of goods from the co"ntry. #) financing proided to an exporter in exchange for goods proided to the creditor by the exporter. A$%W&'( ! .%. inestments in foreign co"ntries against the risk of c"rrency inconertibility expropriation and other political risks. A) &xport2mport Bank of the >nited %tates B) 5riate &xport 6"nding !orporation !) 7erseas 5riate nestment !orporation #) none of these A$%W&'( !

39. *he all2in2rate a bank charges its c"stomer4s) for accepting drafts incl"des both the disco"nt rate and the acceptance commission. A) tr"e. B) false. A$%W&'( A +