Student

20
Student: ___________________________________________________________________________
1.
Forfaiting meets Islamic finance practices.

True False
2.
International trade is more difficult and risky from the exporter's perspective than is domestic trade
because
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
3.
Conducting international trade transactions is difficult in comparison to domestic trades. Which of the
following are false statements regarding this reality?
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
4.
A typical foreign trade transaction requires three basic documents:

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
5.
A time draft can become a negotiable money market instrument called

A. Eurodollars.
B. a banker's acceptance.
C. a letter of credit.
D. a bill of lading.
6.
Forfaiting, in which a bank purchases at a discount from an importer a series of promissory notes in favor
of an exporter,
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.
7.
When a bank purchases at a discount from an importer a series of promissory notes in favor of an
exporter, this is called
A. accounts receivable financing.
B. asset backed commercial paper.
C. discounting.
D. forfeiting.
8.
The Export-Import Bank provides competitive assistance to U.S. exporters through

A. direct loans to foreign importers.
B. loan guarantees.
C. credit insurance to U.S. exporters.
D. all of the above
9.
Countertrade transactions are

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.
10. There are several types of countertrade transactions:

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.
11. The three basic documents needed in a foreign trade transaction are
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.
12. The primary methods of payment for foreign trades, ranked in the order of most secure to least secure for
the exporter is
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.
13. A bill of lading
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.
14. A time draft
C. written order instructing the importer or his agent that calls for payment the amount specified on its
face on a certain date.
15. A banker's acceptance is created when
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.
16. In a consignment sale
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
17. 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.
A. $997,500
B. $15,000 = $1,000,000 (0.015)
C. $2,500
D. None of the above
Question 4 and 5 are an outline of a few of the steps that are typically followed by exporters, importers,
and their respective banks in foreign trade transactions.
18. The ________ sends a purchase order to the ________.
The ________ applies to his bank for a letter of credit.
A. importer; exporter; exporter
B. exporter; importer; importer
C. importer; exporter; importer
D. exporter; importer; exporter
19. 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.
20. Banker's Acceptances usually have maturities ranging from
A. 30 to 180 days.
B. 90 to 360 days.
C. 1 year to 5 years.
D. over 5 years.
21. Assume the time from acceptance to maturity on a $2,000,000 banker's acceptance is 90 days. Further
assume that the importing bank's acceptance commission is 1.25 percent and that the market rate for 90day B/As is 6.0 percent. Calculate the amount the exporter will receive if he discounts the B/A with the
importer's bank.
A. $1,993,750
B. $1,999,375
C. $1,963,750
D. $1,009,375
importer's bank.
A. $906,250
B. $909,375
C. $968,750
D. $993,750
importer's bank.
A. $4,981,750
B. $4,906,250
C. $4,009,375
importer's bank.
A. $3,993,750
B. $3,915,000
C. $3,975,000
D. $3,009,375
assume that the importing bank's acceptance commission is 1 percent and that the market rate for 90day B/As is 3.0 percent. Calculate the amount the exporter will receive if he discounts the B/A with the
importer's bank.
A. $9,993,750
B. $9,900,000
C. $9,975,000
D. $9,009,375
assume that the importing bank's acceptance commission is 1 percent and that the market rate for 90-day
B/As is 3.0 percent. Calculate the amount the banker will receive if the exporter discounts the B/A with
the importer's bank.
A. $200,000
B. $100,000
C. $25,000
D. $75,000
assume that the importing bank's acceptance commission is 1.25 percent and that the market rate for 90day B/As is 6.0 percent. Calculate the amount the exporter will receive if he holds it to maturity.
A. $1,993,750
B. $1,999,375
C. $1,963,750
D. $1,009,375
A. $906,250
B. $909,375
C. $968,750
D. $993,750
A. $4,981,750
B. $4,906,250
C. $4,009,375
A. $3,993,750
B. $3,999,375
C. $3,975,000
D. $3,009,375
B/As is 3.0 percent. Calculate the amount the exporter will receive if he holds it to maturity.
A. $9,993,750
B. $9,999,375
C. $9,975,000
D. $9,009,375
B/As is 3.0 percent. The bond equivalent yield that the exporter pays in discounting the B/A is:
A. 3.05%
B. 3.01%
C. 3.07%
The time from acceptance to maturity on a $3,000,000 banker's acceptance is 90 days.
33. If the importing bank's acceptance commission is 1.25 percent, determine the amount the exporter will
receive if he holds the B/A until maturity.
A. $2,945,625
B. $2,990,625
C. $2,906,250
D. $3,009,375
34. If the market rate for 90-day B/As is 6.0 percent, calculate the amount the exporter will receive if he
discounts the B/A with the importer's bank.
A. $2,945,625
B. $2,990,625
C. $3,000,000
D. $3,009,375
35. The bond equivalent yield that the exporter pays in discounting the B/A is:
A. 6.10%
B. 9.29%
C. 6.02%
B/As is 3.0 percent. The bond equivalent yield that the bank earns in holding the B/A to maturity is:
A. 22.87%
B. 1.02%
C. 4.06%
assume that the importing bank's acceptance commission is 1.25 percent and that the market rate for 180day B/As is 5.0 percent. The bond equivalent yield that the bank earns in holding the B/A to maturity
is:
A. 13.08%
B. 6.54%
C. 4.06%
38. The term "forfaiting"

A. means relinquishing, waiving, yielding, and penalty.
B. is a type of medium-term trade financing used to finance the sale of capital goods.
C involves the sale of promissory notes signed by the importer in favor of the exporter, who might sell the
. notes at a discount from face value.
D. both b and c
39. In a forfaiting transaction, the forfait is usually
A. the importer.
B. the exporter.
C. the bank.
D. the title to the goods, or the bill of lading.
40. In a forfaiting transaction, the forfait
A. buys the notes at a discount from face value from the importer.
B. buys the notes at a discount from face value from the exporter.
C. redeems the notes at a face value to the exporter.
41. In the event of a default
A. the forfait does not have recourse against the exporter in the event of a default by the importer.
B. the forfait does have recourse against the exporter in the event of a default by the importer.
C. the exporter will have to return the goods to the importer.
D. none of the above.
42. One of the steps to follow to develop an investment fund which has been structured to adhere to Shari'ah
principles whilst at the same time making use of forfaiting assets was
Athe fund sponsors had to be careful in ensuring that the pool of non-Islamic forfaiting assets was not
. used to directly satisfy the Islamically compliant obligations under the commodity and trade financing
arrangements.
B. screening is required to ensure that the products underlying the LCs do not run counter to Shari'ah
principles.
C. there had to be a signoff by Islamic scholars to verify that Shari'ah strictures had been met with.
D. all of the above
43. Under the terms of Islamic finance (Shari'ah law)
A. selling debt at a reduced value is strictly forbidden.
B. charging interest is OK, but short selling stock is forbidden.
C. buying low and selling high is forbidden.
44. Among the reasons put forth for government assistance in exporting
A. success in international trade is fundamentally important for a country.
B success in exporting implies that there is demand for a country's products, that its labor force is
. employed, and that some resources are used for technological advancement.
C. to be successful in international trade means that the government is popular.
D. both a and b
45. Export-Import Bank (Eximbank) is an independent agency of the United States government that
facilitates and finances U.S. export trade. Eximbank's purpose is to provide financing in situations where
private financial institutions are unable or unwilling to because of which of the following reasons:
(i) - the loan maturity is too long
(ii) - the amount of the loan is too large
(iii) - the loan risk is too great
(iv) - the importing firm has difficulty obtaining hard currency for payment
(v) - there are no futures or forward contracts available for foreign exchange transactions
A. (i) and (ii)
B. (i), (ii), and (iii)
C. (i), (ii), (iii), and (iv)
D. (i), (ii), (iii), (iv), and (v)
46. Through its Export Credit Insurance Program, Eximbank helps U.S. exporters develop and expand their
overseas sales by
A. protecting them against loss should a foreign buyer default.
B. guaranteeing the loans made by private financial institutions to foreign importers.
C. providing liquidity via the purchase of notes issued by Eximbank to finance the loans.
47. Through its Medium and Long-Term Guarantee Program, Eximbank helps U.S. exporters develop and
expand their overseas sales by
48. The British version of the Eximbank
A. helps U.S. exporters develop and expand their overseas sales.
B. is called Inland Revenue.
C. is called the Exports Credits Guarantee Department.
D. is called Eximbank U.K.
49. The Eximbank helps U.S. exporters develop and expand their overseas sales by
A. working capital guarantees.
B. direct loans to foreign borrowers.
C. loan guarantees.
D. credit insurance.
E. all of the above
50. The term "countertrade" refers to
A many different types of transactions in which the seller provides a buyer with goods or services and
. promises in return to purchase goods or services from the buyer.
B. barter, clearing arrangement, and switch trading.
C. buy-back, counter purchase, and offset.
D. all of the above
51. A clearing arrangement
A. is also called a bilateral clearing agreement.
B. is a form of barter.
C. involves two parties agreeing to buy a specified amount of goods or services from one another.
D. all of the above
52. A switch trade
A. is the purchase by a third party of one country's a clearing agreement balance for hard currency.
D. all of the above
53. A buy-back transaction

B involves a technology transfer via the sale of a manufacturing plant: as part of the terms, the seller of
. the plant agrees to purchase a certain portion of the plant output.
D. all of the above
54. A counterpurchase
A involves a technology transfer via the sale of a manufacturing plant: as part of the terms, the seller of
B. is similar to a buy-back transaction but the seller of the plant agrees to buy unrelated goods.
C. is a form of barter.
D. involves two parties agreeing to buy a specified amount of goods or services from one another.
55. An offset transaction
A. can be viewed as a counterpurchase trade agreement involving the aerospace/defense industry.
C. is the purchase by a third party of one country's a clearing agreement balance for hard currency.
56. A buy-back transaction
A. can be viewed as direct foreign investment in the purchasing country.
B. can be viewed as direct foreign investment in the exporting country.
C. can be viewed as indirect foreign investment in the purchasing country.
57. Countertrade transactions
A. are included in official trade statistics.
B. are NOT included in official trade statistics.
C. reduce trade imbalances and trade deficits.
D. both a and c
58. The armed forces of ____________ leads all government agencies in countertrade.
A. the United States
B. Great Britain
C. China
D. the Philippines
59. Arguments in favor of countertrade include benefits such as
A. conservation of cash or hard currency.
B. improvement of trade imbalances.
C. maintenance of export prices.
D. all of the above
60. A typical foreign trade transaction requires three basic documents
A. letter of credit, bill of lading, and shipping documents.
B. time draft, banker's acceptance, and bill of lading.
C. letter of credit, time draft, and bill of lading.
D. letter of credit, banker's acceptance, and bill of lading.
The importing bank's acceptance commission is 1.25 percent and that the market rate for 90-day B/As is 6
percent.
61. Determine the amount the exporter will receive if he holds the B/A until maturity.
62. Determine the amount the exporter will receive if he discounts the B/A with the importer's bank.
63. Determine the bond equivalent yield the importer's bank will earn from discounting the B/A with the
exporter.
64. If the exporter's opportunity cost of capital is 11 percent, should he discount the B/A or hold it to
maturity?
65. Calculate the amount the banker will receive if the exporter discounts the B/A with the importer's
bank.

The importing bank's acceptance commission is 1.00 percent and that the market rate for 60-day B/As is 5
percent.
exporter.
maturity?
bank.
The time from acceptance to maturity on a $500,000 banker's acceptance is 270 days.
The importing bank's acceptance commission is 0.75 percent and that the market rate for 270-day B/As is
4 percent.
exporter.
maturity?
bank.
The importing bank's acceptance commission is 2 percent and that the market rate for 360-day B/As is 3
percent.
exporter.
maturity?
bank.
2 percent.
exporter.
maturity?
bank.

percent.
exporter.
maturity?
bank.

4 percent.
exporter.
maturity?
bank.

percent.
exporter.
maturity?
100.Calculate the amount the banker will receive if the exporter discounts the B/A with the importer's
bank.
20 Key
1.
Forfaiting meets Islamic finance practices.

TRUE
Eun - Chapter 20 #1
Topic: International Finance in Practice: First Islamic Forfaiting Fund Set Up
2.
International trade is more difficult and risky from the exporter's perspective than is domestic trade
because
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
Eun - Chapter 20 #2
Topic: A Typical Foreign Trade Transaction
3.
Conducting international trade transactions is difficult in comparison to domestic trades. Which of the
following are false statements regarding this reality?
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
Eun - Chapter 20 #3
4.
A typical foreign trade transaction requires three basic documents:

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.
Eun - Chapter 20 #4
5.
A time draft can become a negotiable money market instrument called

A. Eurodollars.
B. a banker's acceptance.
C. a letter of credit.
D. a bill of lading.
Eun - Chapter 20 #5
6.
Forfaiting, in which a bank purchases at a discount from an importer a series of promissory notes in
favor of an exporter,
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.
Eun - Chapter 20 #6
Topic: Forfeiting
7.
When a bank purchases at a discount from an importer a series of promissory notes in favor of an
exporter, this is called
A. accounts receivable financing.
B. asset backed commercial paper.
C. discounting.
D. forfeiting.
Eun - Chapter 20 #7
Topic: Forfeiting
8.
The Export-Import Bank provides competitive assistance to U.S. exporters through

A. direct loans to foreign importers.
B. loan guarantees.
C. credit insurance to U.S. exporters.
D. all of the above
Eun - Chapter 20 #8
Topic: Government Assistance in Exporting
9.
Countertrade transactions are

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.
Eun - Chapter 20 #9
Topic: Countertrade
10.
There are several types of countertrade transactions:

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.
Eun - Chapter 20 #10
Topic: Countertrade
11.
The three basic documents needed in a foreign trade transaction are

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.
12.
The primary methods of payment for foreign trades, ranked in the order of most secure to least secure
for the exporter is
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.
13.
A bill of lading
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.
C. is a time draft that calls for payment upon physical delivery of goods.
14.
A time draft
C. written order instructing the importer or his agent that calls for payment the amount specified on its
face on a certain date.
15.
A banker's acceptance is created when

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.
16.
In a consignment sale
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
17.
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.
A. $997,500
B. $15,000 = $1,000,000 (0.015)
C. $2,500
Question 4 and 5 are an outline of a few of the steps that are typically followed by exporters,
importers, and their respective banks in foreign trade transactions.
Eun - Chapter 20
18.
The ________ sends a purchase order to the ________.

The ________ applies to his bank for a letter of credit.
19.
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.
20.
Banker's Acceptances usually have maturities ranging from

A. 30 to 180 days.
B. 90 to 360 days.
C. 1 year to 5 years.
D. over 5 years.
21.
Assume the time from acceptance to maturity on a $2,000,000 banker's acceptance is 90 days. Further
assume that the importing bank's acceptance commission is 1.25 percent and that the market rate for
90-day B/As is 6.0 percent. Calculate the amount the exporter will receive if he discounts the B/A
with the importer's bank.
A. $1,993,750
B. $1,999,375
C. $1,963,750
D. $1,009,375
22.
Assume the time from acceptance to maturity on a $1,000,000 banker's acceptance is 180 days.
Further assume that the importing bank's acceptance commission is 1.25 percent and that the market
rate for 180-day B/As is 5.0 percent. Calculate the amount the exporter will receive if he discounts the
B/A with the importer's bank.
A. $906,250
B. $909,375
C. $968,750
D. $993,750
23.
Assume the time from acceptance to maturity on a $5,000,000 banker's acceptance is 90 days. Further
assume that the importing bank's acceptance commission is 1.5 percent and that the market rate for
90-day B/As is 6.0 percent. Calculate the amount the exporter will receive if he discounts the B/A
A. $4,981,750
B. $4,906,250
C. $4,009,375
24.
rate for 90-day B/As is 3.0 percent. Calculate the amount the exporter will receive if he discounts the
B/A with the importer's bank.
A. $3,993,750
B. $3,915,000
C. $3,975,000
D. $3,009,375
25.
Further assume that the importing bank's acceptance commission is 1 percent and that the market rate
for 90-day B/As is 3.0 percent. Calculate the amount the exporter will receive if he discounts the B/A
A. $9,993,750
B. $9,900,000
C. $9,975,000
D. $9,009,375
26.
for 90-day B/As is 3.0 percent. Calculate the amount the banker will receive if the exporter discounts
the B/A with the importer's bank.
A. $200,000
B. $100,000
C. $25,000
D. $75,000
27.
rate for 90-day B/As is 6.0 percent. Calculate the amount the exporter will receive if he holds it to
maturity.
A. $1,993,750
B. $1,999,375
C. $1,963,750
D. $1,009,375
28.
maturity.
A. $906,250
B. $909,375
C. $968,750
D. $993,750
29.
maturity.
A. $4,981,750
B. $4,906,250
C. $4,009,375
30.
maturity.
A. $3,993,750
B. $3,999,375
C. $3,975,000
D. $3,009,375
31.
Further assume that the importing bank's acceptance commission is 1 percent and that the market
maturity.
A. $9,993,750
B. $9,999,375
C. $9,975,000
D. $9,009,375
32.
for 90-day B/As is 3.0 percent. The bond equivalent yield that the exporter pays in discounting the B/
A is:
A. 3.05%
B. 3.01%
C. 3.07%

Eun - Chapter 20
33.
If the importing bank's acceptance commission is 1.25 percent, determine the amount the exporter will
receive if he holds the B/A until maturity.
A. $2,945,625
B. $2,990,625
C. $2,906,250
D. $3,009,375
34.
If the market rate for 90-day B/As is 6.0 percent, calculate the amount the exporter will receive if he
discounts the B/A with the importer's bank.
A. $2,945,625
B. $2,990,625
C. $3,000,000
D. $3,009,375
35.
The bond equivalent yield that the exporter pays in discounting the B/A is:
A. 6.10%
B. 9.29%
C. 6.02%
36.
for 90-day B/As is 3.0 percent. The bond equivalent yield that the bank earns in holding the B/A to
maturity is:
A. 22.87%
B. 1.02%
C. 4.06%
37.
rate for 180-day B/As is 5.0 percent. The bond equivalent yield that the bank earns in holding the B/A
to maturity is:
A. 13.08%
B. 6.54%
C. 4.06%
38.
The term "forfaiting"

A. means relinquishing, waiving, yielding, and penalty.
B. is a type of medium-term trade financing used to finance the sale of capital goods.
C.involves the sale of promissory notes signed by the importer in favor of the exporter, who might sell
the notes at a discount from face value.
D. both b and c
Topic: Forfaiting
39.
In a forfaiting transaction, the forfait is usually

A. the importer.
B. the exporter.
C. the bank.
D. the title to the goods, or the bill of lading.
Topic: Forfaiting
40.
In a forfaiting transaction, the forfait

A. buys the notes at a discount from face value from the importer.
B. buys the notes at a discount from face value from the exporter.
C. redeems the notes at a face value to the exporter.
Topic: Forfaiting
41.
In the event of a default

A. the forfait does not have recourse against the exporter in the event of a default by the importer.
B. the forfait does have recourse against the exporter in the event of a default by the importer.
C. the exporter will have to return the goods to the importer.
D. none of the above.
Topic: Forfaiting
42.
One of the steps to follow to develop an investment fund which has been structured to adhere to
Shari'ah principles whilst at the same time making use of forfaiting assets was
Athe fund sponsors had to be careful in ensuring that the pool of non-Islamic forfaiting assets was
. not used to directly satisfy the Islamically compliant obligations under the commodity and trade
financing arrangements.
B. screening is required to ensure that the products underlying the LCs do not run counter to Shari'ah
principles.
C. there had to be a signoff by Islamic scholars to verify that Shari'ah strictures had been met with.
D. all of the above
43.
Under the terms of Islamic finance (Shari'ah law)

A. selling debt at a reduced value is strictly forbidden.
B. charging interest is OK, but short selling stock is forbidden.
C. buying low and selling high is forbidden.
44.
Among the reasons put forth for government assistance in exporting

A. success in international trade is fundamentally important for a country.
B success in exporting implies that there is demand for a country's products, that its labor force is
. employed, and that some resources are used for technological advancement.
C. to be successful in international trade means that the government is popular.
D. both a and b
Topic: Government Assistance in Exporting
45.
Export-Import Bank (Eximbank) is an independent agency of the United States government that
facilitates and finances U.S. export trade. Eximbank's purpose is to provide financing in situations
where private financial institutions are unable or unwilling to because of which of the following
reasons:
(i) - the loan maturity is too long
(ii) - the amount of the loan is too large
(iii) - the loan risk is too great
(iv) - the importing firm has difficulty obtaining hard currency for payment
(v) - there are no futures or forward contracts available for foreign exchange transactions
A. (i) and (ii)
B. (i), (ii), and (iii)
C. (i), (ii), (iii), and (iv)
D. (i), (ii), (iii), (iv), and (v)
Topic: The Export-Import Bank and Affiliated Organizations
46.
Through its Export Credit Insurance Program, Eximbank helps U.S. exporters develop and expand
their overseas sales by
47.
Through its Medium and Long-Term Guarantee Program, Eximbank helps U.S. exporters develop and
expand their overseas sales by
48.
The British version of the Eximbank

A. helps U.S. exporters develop and expand their overseas sales.
B. is called Inland Revenue.
C. is called the Exports Credits Guarantee Department.
D. is called Eximbank U.K.
49.
The Eximbank helps U.S. exporters develop and expand their overseas sales by
A. working capital guarantees.
B. direct loans to foreign borrowers.
C. loan guarantees.
D. credit insurance.
E. all of the above
50.
The term "countertrade" refers to

A many different types of transactions in which the seller provides a buyer with goods or services and
. promises in return to purchase goods or services from the buyer.
B. barter, clearing arrangement, and switch trading.
C. buy-back, counter purchase, and offset.
D. all of the above
Topic: Countertrade
Topic: Forms of Countertrade
51.
A clearing arrangement
D. all of the above
Topic: Countertrade
52.
A switch trade
A. is the purchase by a third party of one country's a clearing agreement balance for hard currency.
D. all of the above
Topic: Countertrade
53.
A buy-back transaction
D. all of the above
Topic: Countertrade
54.
A counterpurchase
A involves a technology transfer via the sale of a manufacturing plant: as part of the terms, the seller of
B. is similar to a buy-back transaction but the seller of the plant agrees to buy unrelated goods.
C. is a form of barter.
D. involves two parties agreeing to buy a specified amount of goods or services from one another.
Topic: Countertrade
55.
An offset transaction
A. can be viewed as a counterpurchase trade agreement involving the aerospace/defense industry.
C. is the purchase by a third party of one country's a clearing agreement balance for hard currency.
Topic: Countertrade
56.
A buy-back transaction
A. can be viewed as direct foreign investment in the purchasing country.
B. can be viewed as direct foreign investment in the exporting country.
C. can be viewed as indirect foreign investment in the purchasing country.
Topic: Countertrade
57.
Countertrade transactions
A. are included in official trade statistics.
B. are NOT included in official trade statistics.
C. reduce trade imbalances and trade deficits.
D. both a and c
Topic: Countertrade
58.
The armed forces of ____________ leads all government agencies in countertrade.

A. the United States
B. Great Britain
C. China
D. the Philippines
Topic: International Finance in Practice: Armed Forces Tops in Countertrade List
59.
Arguments in favor of countertrade include benefits such as

A. conservation of cash or hard currency.
B. improvement of trade imbalances.
C. maintenance of export prices.
D. all of the above
Topic: Some Generalizations about Countertrade
60.
A typical foreign trade transaction requires three basic documents

A. letter of credit, bill of lading, and shipping documents.
B. time draft, banker's acceptance, and bill of lading.
C. letter of credit, time draft, and bill of lading.
D. letter of credit, banker's acceptance, and bill of lading.
Topic: Summary

The importing bank's acceptance commission is 1.25 percent and that the market rate for 90-day B/As
is 6 percent.
Eun - Chapter 20

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20

Forfaiting meets Islamic finance practices.

A typical foreign trade transaction requires three basic documents:

A time draft can become a negotiable money market instrument called

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

Countertrade transactions are

10. There are several types of countertrade transactions:

38. The term "forfaiting"

53. A buy-back transaction

The time from acceptance to maturity on a $1,000,000 banker's acceptance is 60 days.

The time from acceptance to maturity on a $300,000 banker's acceptance is 30 days.

The time from acceptance to maturity on a $30,000,000 banker's acceptance is 45 days.

The time from acceptance to maturity on a $1,000,000 banker's acceptance is 90 days.

Forfaiting meets Islamic finance practices.

A typical foreign trade transaction requires three basic documents:

A time draft can become a negotiable money market instrument called

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

Countertrade transactions are

There are several types of countertrade transactions:

The three basic documents needed in a foreign trade transaction are

A banker's acceptance is created when

The ________ sends a purchase order to the ________.

Banker's Acceptances usually have maturities ranging from

The time from acceptance to maturity on a $3,000,000 banker's acceptance is 90 days.

The term "forfaiting"

In a forfaiting transaction, the forfait is usually

In a forfaiting transaction, the forfait

In the event of a default

Under the terms of Islamic finance (Shari'ah law)

Among the reasons put forth for government assistance in exporting

The British version of the Eximbank

The term "countertrade" refers to

The armed forces of ____________ leads all government agencies in countertrade.

Arguments in favor of countertrade include benefits such as

A typical foreign trade transaction requires three basic documents

The time from acceptance to maturity on a $2,000,000 banker's acceptance is 90 days.

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