Q&A Hero

Q: Which of the following is a drawback of a countertrade agreement? A.It fails to give firms a way to finance an export deal. B.It requires an in-house trading department to be maintained, which can be expensive and time-consuming. C.It is detrimental to the economy of the importing country. D.Developing nations may have trouble raising the foreign exchange necessary to pay for imports. E.It is not an acceptable means of trading in most developing countries.

Q: A drawback of countertrade is that: A.it fails to enable firms to finance an export deal. B.it is detrimental to the economy of the importing country. C.developing nations have trouble raising the foreign exchange necessary to pay for imports. D.it does not allow firms to invest in an in-house trading department dedicated to arranging and managing deals. E.it may involve the exchange of poor-quality goods that cannot be disposed of profitably.

Q: TruWorth Petroleum negotiated a deal with a foreign country in which TruWorth would build several ammonia plants in the foreign country and receive ammonia as partial payment over a 20-year period. This is an example of: A.switch trading. B.a buyback. C.a counterpurchase. D.an offset. E.barter.

Q: 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. This type of countertrade is called a(n): A.counterpurchase. B.offset. C.switch trade. D.buyback. E.barter.

Q: A firm concludes a counterpurchase agreement with a foreign country for which it receives some counterpurchase credits for purchasing its goods. The firm does not want any foreign goods, however, so it sells the credits to a third-party trading house at a discount. The trading house finds a firm that can use the credits and sells them at a profit. This is an example of: A.barter. B.switch trading. C.an offset. D.a buyback. E.compensation.

Q: A type of countertrade where a third-party trading house buys the firm's counterpurchase credits and sells them to another firm that can better use them is called: A.barter. B.switch trading. C.offset. D.buyback. E.compensation.

Q: The use of a specialized third-party trading house in a countertrade arrangement is known as: A.counterpurchase. B.offset. C.switch trading. D.buyback. E.barter.

Q: From an exporter's perspective, why is an offset more attractive than a straight counterpurchase agreement? A.It is the simplest countertrade arrangement. B.It gives the exporter greater flexibility to choose the goods that it wishes to purchase. C.It allows the use of a specialized third-party trading house. D.It gives the exporter counterpurchase credits, which can be used to purchase goods from another country. E.It allows direct exchange of goods and/or services between two parties without a cash transaction.

Q: A buying agreement where the exporting country can fulfill the agreement with any firm in the country to which the sale is being made is called a(n): A.switch trade. B.offset. C.buyback. D.arbitrage. E.barter.

Q: A firm sells some products to a foreign country. The foreign country pays the firm in dollars but in exchange the firm agrees to spend some of the proceeds from the sale on textiles produced by the foreign country. In which of the following types of countertrade arrangement are the two parties engaged? A.Switch trading B.Buyback C.Counterpurchase D.Barter E.Compensation

Q: The type of countertrade where a firm agrees to purchase a certain amount of materials back from a country to which a sale is made is called: A.barter. B.counterpurchase. C.compensation. D.switch trading. E.buyback.

Q: Which of the following is true of counterpurchase? A.It is the most restrictive countertrade arrangement. B.It is a reciprocal buying agreement. C.It is the simplest countertrade arrangement. D.It uses a specialized third-party trading house. E.It is the direct exchange of goods without a cash transaction.

Q: To cater to the growing demand for luxury cars, Terabithia Republic agreed to buy 5,000 cars from MotoSporto Inc. in exchange for 5,000 gallons of oil. Due to a lack of trust, Terabithia decided to make it a one-time-only deal. Which of the following forms of countertrade is the country most likely to use? A.Counterpurchase B.Offset C.Switch trading D.Barter E.Buyback

Q: Which of the following is a disadvantage of barter as a countertrade arrangement? A.It is a very complex arrangement. B.In a barter system, if goods are exchanged simultaneously, one party ends up financing the other. C.Firms engaged in barter run the risk of having to accept goods they do not want or cannot use. D.It involves huge cash transactions. E.It cannot be used in transactions with trading partners who are not creditworthy.

Q: Which of the following is true of barter as a countertrade arrangement? A.It is a very complex arrangement. B.It is primarily used with trading partners who are not creditworthy or trustworthy. C.It involves cash transactions. D.When goods are exchanged simultaneously, one partner ends up financing the other. E.It is the most flexible countertrade arrangement.

Q: Which of the following is the most restrictive countertrade arrangement? A.Counterpurchase B.Offset C.Barter D.Switch trading E.Buyback

Q: The direct exchange of goods and/or services between two parties without a cash transaction is referred to as: A.switch trading. B.counterpurchase. C.barter. D.offset. E.buyback.

Q: Which of the following is a distinct type of countertrade arrangement? A.Merger B.Arbitrage C.Dirty float D.Barter E.Deregulation

Q: Which of the following is true of countertrade? A.The governments of developing nations sometimes insist on a certain amount of countertrade. B.Countertrade is a means of structuring an international sale when conventional means of payment are cost-effective. C.Nonconvertibility is an advantage for exporters. D.Nonconvertibility implies that the exporter will be paid only in his or her home currency. E.Most exporters desire payment in a currency that is not convertible.

Q: In the modern era, countertrade arose in the 1960s as a way to purchase imports for: A.the United States. B.the Soviet Union. C.Germany. D.Japan. E.Africa.

Q: Countertrade occurs when the: A.exporter may not be paid in his or her home currency due to nonconvertibility. B.exporter can convert the currency only in U.S. dollars. C.exporter is dealing with a country that has huge foreign reserves. D.exporter has easy access to export credit to fund its international trade. E.importer defaults on payment.

Q: A range of barterlike agreements by which goods and services are traded for other goods and services when they cannot be traded for money is known as: A.countertrade. B.carry trade. C.free trade. D.counter sale. E.countervailing duty.

Q: Countertrade is most likely to be used when: A.the foreign currency is easily convertible. B.the exporter has a letter of credit. C.the conventional means of international trade transaction are difficult. D.there is mutual trust between the exporter and the importer. E.an export management company is used.

Q: The Foreign Credit Insurance Association (FCIA) is an association of private commercial institutions operating under the guidance of the: A.Federal Mediation and Conciliation Service. B.U.S. Department of Commerce. C.Export-Import Bank. D.International Trade Administration. E.Ministry of International Trade and Industry.

Q: In the United States, export credit insurance is provided by the: A.Export-Import Bank. B.Bank of New York. C.Foreign Credit Insurance Association. D.Federal Deposit Insurance Corporation. E.Federal Reserve Bank.

Q: An export credit insurance is necessary when the exporter: A.is exposed to the risk that the importer may default on payment. B.is dealing in a country that has a nonconvertible currency. C.is unable to obtain any pre-export financing. D.has received a letter of credit from the importer's bank. E.has to enter a barterlike agreement.

Q: An exporter has to forgo a letter of credit when: A.competing exporters also require letters of credit. B.the importer is facing stiff competition from other importers. C.the exporter is a dominant player in a noncompetitive market. D.the importer is in a strong bargaining position. E.he or she knows that the importer will default on payment.

Q: The bank that has a direct lending operation under which it lends dollars to foreign borrowers for use in purchasing U.S. exports is called the: A.Department of Commerce. B.World Bank. C.Ex-Im Bank. D.Bank of New York. E.Small Business Administration.

Q: Repayment of medium- and long-term loans U.S. commercial banks make to foreign borrowers for purchasing U.S. exports is guaranteed by the: A.United Nations. B.Central Bank. C.World Bank. D.Ex-Im Bank. E.Export Credit Insurance Association.

Q: Financing aid that will facilitate exports, imports, and the exchange of commodities between the United States and other countries is provided by the: A.sogo shosha. B.World Bank. C.Overseas Commercial Service. D.Ex-Im Bank. E.Export Credit Insurance Association.

Q: Which of the following is the first step in a typical international trade transaction? A.The exporter agrees to ship under a letter of credit and specifies relevant information such as prices and delivery terms. B.The importer applies to a trusted third party (usually a bank) for a letter of credit to be issued in favor of the exporter for the merchandise the importer wishes to buy. C.The importer places an order with the exporter and asks the exporter if he would be willing to ship under a letter of credit. D.The exporter ships the goods to the importer on a common carrier. An official of the carrier gives the exporter a bill of lading. E.The trusted third party (usually a bank) issues a letter of credit in the importer's favor and sends it to the exporter's bank.

Q: When a bill of lading is used to obtain payment or a written promise of payment before the merchandise is released to the importer, it serves as a: A.document of title. B.contract. C.receipt. D.time draft. E.collateral.

Q: When serving as collateral, the bill of lading: A.can be used to advance funds to the exporter by its local bank before or during shipment. B.specifies that the carrier is obligated to provide a transportation service in return for a certain charge. C.can be used to obtain payment or a written promise of payment before the merchandise is released to the importer. D.states that the bank will pay a specified sum of money to a beneficiary, normally the exporter, on presentation of particular, specified documents. E.is 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.

Q: When a bill of lading specifies that the carrier is obligated to provide a transportation service in return for a certain charge, it serves as a: A.contract. B.receipt. C.document of title. D.letter of credit. E.bill of exchange.

Q: Which of the following is issued to an exporter by a common carrier transporting the merchandise and serves as a receipt, a contract, and a document of title? A.Bill of lading B.Collateral C.Draft D.Letter of credit E.Bill of exchange

Q: Which of the following is a characteristic of a time draft? A.It has no value given the deferred nature of the document. B.It is generally not preferred in international transactions. C.It is a negotiable instrument. D.It is also known as a bill of lading. E.It cannot be sold by an exporter.

Q: When a time draft is drawn on and accepted by a business firm, it is known as a(n): A.trade acceptance. B.in-transit bill. C.banker's acceptance. D.bill of lading. E.letter of credit.

Q: When a time draft is drawn on and accepted by a bank, it is known as a: A.trade acceptance. B.banker's check. C.banker's acceptance. D.bill of lading. E.letter of credit.

Q: Once accepted by the drawee, a time draft becomes a(n): A.asset for the drawee. B.in-transit bill. C.promise to pay by the accepting party. D.bill of lading. E.letter of credit.

Q: When a time draft is presented to a drawee, he or she signifies acceptance of it by: A.delivering the goods immediately. B.paying the draft amount immediately. C.providing a collateral for the amount specified in the bill. D.writing or stamping a notice of acceptance on its face. E.selling the draft to an investor at a discount from its face value.

Q: Which of the following drafts allows for a delay in payment? A.Sight draft B.Time draft C.Bill of lading D.Counterpurchase E.Offset

Q: Which of the following drafts is payable on presentation to the drawee? A.Bill of lading B.Sight draft C.Letter of credit D.Time draft E.Offset

Q: In international commerce, the party initiating a draft is known as the: A.maker. B.drawee. C.buyer. D.agent. E.drafter.

Q: Which of the following is true with respect to the international and domestic practices of settling trade transactions? A.In an international transaction, a formal promise to pay is required before the buyer can obtain the merchandise. B.In an international transaction, the seller usually ships merchandise on an open account. C.In a domestic transaction, a draft is used to settle trade transactions. D.In an international transaction, the exporter sends a commercial invoice that specifies the amount due and the terms of payment to the importer. E.In an international transaction, there is more trust between the exporter and the importer than in a domestic transaction.

Q: In international commerce, an order written by an exporter instructing an importer to pay a specified amount of money at a specified time is known as a: A.bill of lading. B.draft. C.letter of credit. D.counterpurchase. E.buyback.

Q: For an importer, which of the following is a disadvantage of using a letter of credit for international transactions? A.It results in the importer losing control over the process of trading. B.It reduces the exporter's level of trust in the importer. C.It reduces the importer's ability to borrow funds for other purposes. D.It requires the importer to repay the loan even before the merchandise is sold. E.It is not issued at the importer's request.

Q: Which of the following is an advantage of a letter of credit for an importer? A.The importer does not have to pay for the merchandise until the documents have arrived. B.Obtaining pre-export financing becomes easier. C.It helps the importer to get goods for a lower price. D.It results in lower shipping costs. E.The importer does not have to pay the third party a fee for facilitating the transaction.

Q: Which of the following is an advantage of having a letter of credit? A.It allows payment for merchandise after its delivery. B.It facilitates an exporter to obtain pre-export financing. C.It allows an exporter to get a higher price for his or her goods. D.It helps exporters incur lower shipping costs. E.It does not require the importer to pay any fee.

Q: Which of the following is true of a letter of credit in international trade? A.No cash deposit or collateral is required from the importer. B.The exporter pays the trusted third party (usually a bank) a fee for the service. C.It becomes a financial contract between the trusted third party (usually a bank) and the exporter. D.It is issued by the exporter at the request of the importer. E.The creditworthiness of the importer is irrelevant when issuing a letter of credit.

Q: Which of the following is true of a letter of credit? A.It states that the bank will pay a specified sum of money to a beneficiary on presentation of particular, specified documents. B.It is a document written by an exporter instructing an importer to pay a specified amount of money at a specified time. C.It serves as a receipt, a contract, and a document of title. D.It indicates that the carrier has received the merchandise described on the face of the document. E.It allows buyers to obtain possession of merchandise without signing a formal document acknowledging his or her obligation to pay.

Q: Which of the following stands at the center of international commercial transactions and is issued by a bank at the request of an importer? A.Bill of lading B.Time draft C.Letter of credit D.Sight draft E.Bill of exchange

Q: In terms of using a third party in international trade, title to the products is given to a bank by the exporter in the form of a document known as a: A.merchandise bill. B.bill of lading. C.bill of exchange. D.draft. E.letter of credit.

Q: A lack of trust between two parties engaged in international trade is exacerbated by the: A.saturation of the domestic market. B.similar preferences of the parties regarding how a transaction should be configured. C.narrowing distance between the two parties due to technological advances. D.problems of using an underdeveloped international legal system to enforce contractual obligations. E.possibility of doing business with someone with whom they have been associated for a long time.

Q: In international trade, an exporter wants to be paid before a consignment is shipped. Correspondingly, the importer wants to pay only upon receipt of the consignment. These conflicting preferences of the parties are a manifestation of: A.corporate greed. B.acculturation. C.lack of trust. D.cultural insensitivity. E.countertrading opportunities.

Q: Firms engaged in international trade deal with people they may have never seen, who live in different countries, who speak different languages, and who abide by different legal systems. These factors result in: A.easy tracking of the parties involved. B.a lack of trust between the parties. C.strict enforcement of contractual obligations. D.rapid acculturation. E.better understanding of how transactions should be configured.

Q: Which of the following is a strategic step taken to increase a firm's probability of exporting successfully? A.Avoiding the use of export management companies to contain costs B.Entering several markets simultaneously to hedge risk C.Entering a foreign market on a small scale D.Waiting for export opportunities E.Avoiding recruitment of local personnel

Q: A firm that enters many markets at once: A.runs the risk of spreading its limited management resources too thin. B.becomes established in all the markets. C.gets the time to learn about each market. D.has fewer export opportunities. E.reduces the costs of any subsequent failure.

Q: Which of the following is a drawback of relying on an export management company (EMC)? A.It does not provide references and has no antecedents. B.The exporting company can fail to develop its own exporting capabilities. C.It does not have expert specialists to help a neophyte exporter identify opportunities. D.It typically lacks information about local business regulations. E.The exporting company cannot avoid the common pitfalls of exporting.

Q: Which of the following is a function of an export management company? A.It starts exporting operations for a firm with the understanding that the firm will take over operations after they are well established. B.It coordinates the Export Legal Assistance Network, a nationwide group of international trade attorneys. C.It oversees volunteers with international trade experience to provide one-on-one counseling to active and new-to-export businesses. D.It collects duties on exported products and sets interest rates for charging foreign investors. E.It gives novice exporters the names and addresses of potential distributors in foreign markets along with businesses they are in.

Q: Which of the following refers to an export specialist that acts as an export marketing department for client firms? A.Export management company B.Export-import firm C.Foreign direct investment management firm D.Strategy management company E.Association of export companies

Q: A nationwide group of international trade attorneys who provide free initial consultations to small businesses on export-related matters is the: A.TradeNet Export Advisor. B.Export Trade Assistance Partnership. C.United States Trade Service. D.Export Legal Assistance Network. E.Ex-Im Network.

Q: The Small Business Administration oversees almost 11,500 volunteers with international trade experience to provide one-on-one counseling to active and new-to-export businesses through its program known as the: A.Export Legal Assistance Network. B.Service Corps of Retired Executives. C.International Trade Veteran's Group. D.Network of Foreign Trade Executives. E.Export Management Company.

Q: Which of the following organizations runs the Service Corps of Retired Executives (SCORE) program? A.Foreign Credit Insurance Association B.International Trade Administration C.Small Business Administration D.U.S. Department of Commerce E.U.S. Commercial Service

Q: The government organization that employs 76 district international trade officers and 10 regional international trade officers throughout the United States as well as a 10-person international trade staff in Washington, D.C. to help potential exporters is the: A.Federal Trade Commission. B.U.S. Commercial Service. C.International Trade Administration. D.Small Business Administration. E.sogo shosha.

Q: Representatives of the U.S. Department of Commerce accompany groups of U.S. businesspeople abroad to meet with qualified agents, distributors, and customers, as part of the: A.matchmaker program. B."best prospects" listing. C.SCORE program. D."comparison shopping service." E.export-import program.

Q: Which of the following is a way in which the U.S. Department of Commerce helps potential exporters? A.It oversees volunteers with international trade experience and directs them to provide one-on-one counseling to active and new-to-export businesses. B.It assembles a "comparison shopping service" for 14 countries that are major markets for U.S. exports. C.It coordinates a nationwide group of international trade attorneys who provide free initial consultations to small businesses on export-related matters. D.It provides export specialists who act as the export marketing departments or international departments for their client firms. E.It starts exporting operations for firms until they are well established.

Q: The list provided by the International Trade Administration to a potential exporter with the names and addresses of potential distributors in foreign markets, along with businesses they are in, is called the: A.ELAN list. B."best prospects" list. C."comparison shopping service." D.SCORE list. E.export management list.

Q: Which of the following institutions within the U.S. Department of Commerce is dedicated to providing businesses with intelligence and assistance for attacking foreign markets? A.The International Trade Administration B.The Small Business Administration C.The Federal Trade Commission D.The Bureau of Competition E.The Bank of New York

Q: The most comprehensive source of information on export opportunities for U.S. firms is the: A.Small Business Administration. B.Department of Commerce. C.Federal Trade Commission. D.Bureau of Competition. E.Bank of New York.

Q: Which of the following is true of the export performance of the United States, Germany, and Japan? A.Historically, the United States has made its living as a trading nation. B.Germany has been a relatively self-contained continental economy in which international trade played a minor role. C.Unlike Japan, U.S. firms have a strong information advantage when they seek export opportunities. D.The United States has not yet evolved an institutional structure for promoting exports similar to that of Germany. E.The Ministry of International Trade and Industry (MITI) in the United States is always on the lookout for export opportunities.

Q: The sogo shosha of Japan: A.proactively and continuously seek export opportunities for their affiliated companies. B.exclusively serve the largest and most prestigious companies in Japan. C.have offices concentrated in the business district of Tokyo. D.have monopolized the export market in the country. E.consider export only when there is excess production at home.

Q: Japan's great trading houses are referred to as: A.kaizen. B.sogo shosha. C.zaibatsu. D.guanxi. E.kanban.

Q: Due to the complexity and diversity of foreign markets, firms sometimes hesitate to seek export opportunities. These firms can best overcome ignorance by: A.shortening production runs. B.creating revenue. C.outsourcing decisions. D.collecting information. E.lowering unit costs.

Q: Which of the following is true of exporting? A.It takes a very short time before all foreigners are comfortable enough to purchase in significant quantities. B.Novice exporters tend to overestimate the time required to cultivate business in foreign countries. C.Exporters often face voluminous paperwork, complex formalities, and many potential delays and errors. D.Large firms are usually unfamiliar with foreign market opportunities. E.Large firms do not consider exporting until their domestic market is saturated.

Q: Which of the following is true of exporting? A.Many foreign customers require face-to-face negotiations on their home turf. B.Large firms tend to wait for the world to come to them, rather than going out into the world to seek opportunities. C.Exporters have the advantage of reduced paperwork and fewer formalities. D.Medium-sized and small firms are proactive about seeking opportunities for profitable exporting. E.Firms that focus only on exporting often lose out on significant opportunities for growth and cost reduction.

Q: Which of the following is a common pitfall that novice exporters come across? A.Poor understanding of the opportunities in the domestic market B.Low unit costs C.Increased economies of scale D.Problems securing financing E.Familiar distribution systems

Q: Many medium-sized and small firms are not proactive in seeking export opportunities because: A.they are familiar with the foreign market and do not find it challenging enough. B.the export market is similar to the home market in terms of legal and business practices. C.they are intimidated by the complexities and mechanics of exporting to foreign countries. D.domestic regulations limit their ability to export profitably. E.they can't recruit managers with the expertise needed to cultivate business in foreign countries.

Q: Which of the following is true of medium-sized and small firms? A.They are proactive about seeking opportunities for profitable exporting. B.They consider exporting only after their domestic market is saturated. C.They are not intimidated by the complexities of foreign legal systems. D.They have a high degree of familiarity with foreign market opportunities. E.They explore foreign markets to see where the opportunities lie for leveraging their technology.

Q: While seeking opportunities for profitable exporting, large firms generally tend to be: A.passive. B.risk averse. C.wary. D.proactive. E.neutral.

Q: Firms that do not export often: A.face problems of currency conversion. B.lose out on significant opportunities for cost reduction. C.are able to reduce their unit costs. D.are not intimidated by the business practices of foreign countries. E.explore foreign markets to see where they can leverage their technology.