Question 1

The term _____ refers to a situation in which an exporter sells a time draft at a discount to an intermediary (often a bank) that will pay the exporter immediately and then collect the full amount from the importer at the later date.
A) free on board
B) goodwill
C) factoring
D) flight capital
E) cash in advance

Accepted Answer

This situation is known as factoring, where an exporter sells their time draft at a discount to a third party, who then collects the full amount from the importer at a later date. This helps the exporter receive the payment immediately, without having to wait for the importer's payment, and also transfers the risk of non-payment to the third party. Options A, B, D, and E do not describe this scenario.

Question 2

Due to national security or product scarcity, some governments require that organizations need to acquire a(n) _____, which refers to the permission to export goods.
A) export declaration
B) license
C) letter of credit
D) bill of lading
E) customs invoice

Accepted Answer

Governments require organizations to acquire an export license in order to ensure that goods are not being exported to prohibited parties or countries. This is done for national security reasons or to manage the scarcity of certain products. An export declaration, letter of credit, bill of lading, and customs invoice are all related to export documentation but do not specifically refer to the permission to export.

Question 3

Which of the following statements holds true for an open account?
A) It is an arrangement in which the exporter ships the goods and then bills the importer.
B) It is an arrangement in which an exporter is paid immediately on receipt of the bill of exchange.
C) It is an arrangement in which an exporter sells a time draft at a discount to an intermediary that will pay the exporter immediately and then collect the full amount from the importer at the later date.
D) It is an arrangement in which the exporter is paid exactly one year after the delivery has been made to the importer.
E) It is an arrangement in which the exporter requires payment from the importer before shipping the goods.

Accepted Answer

An open account is an arrangement in which the exporter ships the goods and then bills the importer, giving them a designated period of time to pay. This is also known as "net terms."

Question 4

A _____ typically prepares the documentation, suggests shipping methods, navigates trade regulations, and assists with details like packing and labeling.
A) freight forwarder
B) crew manager
C) fleet superintendent
D) marine superintendent
E) reefer product manager

Accepted Answer

A freight forwarder is a professional who specializes in arranging shipments for individuals or companies. Their job duties include preparing documentation, suggesting shipping methods, navigating trade regulations, and assisting with details like packing and labeling.

Question 5

Which of the following statements holds true for insurance certificates?
A) It is a document that authorizes the carrier to transport the goods to the buyer's destination.
B) It is a document that contains the description of the items being shipped.
C) It is a document that declares the country from which the product originates.
D) It is a document that represents the bill for the goods shipped from the exporter to the importer or buyer.
E) It is a document that shows the amount of coverage on the goods being transported.

Accepted Answer

Insurance certificates are documents that show the amount of coverage on the goods being transported. They are issued by the insurance company to the exporter or importer to certify that the goods are insured against loss or damage during transit.

Question 6

Which of the following statements is true about distributors?
A) Distributors are export intermediaries who represent the company in the foreign market.
B) Distributors are export intermediaries who ensure the physical transportation of goods from one country to another.
C) Distributors are export intermediaries who are responsible for branding of the goods sold by them.
D) Distributors are export intermediaries who are the sole recipient of the profits generated after the sale of goods.
E) Distributors are export intermediaries who design and develop the goods that are sold by them.

Accepted Answer

Distributors are export intermediaries who represent the company in the foreign market. They act as a bridge between the producer and the customer in a foreign market, ensuring that products reach the intended destination and are promoted effectively. They are not responsible for physical transportation, branding, designing or developing of the goods sold. They typically earn a commission or margin on the sale of goods, but are not the sole recipient of profits generated.

Question 7

_____ refers to the financing granted against collateral, which can be the imported/exported goods.
A) Angel funding
B) Purchase Order Financing
C) Secured financing
D) Overdraft
E) Cash advance

Accepted Answer

Secured financing refers to the financing granted against collateral, which can be the imported/exported goods.

Question 8

_____ refers to an organization that helps U.S. businesses invest overseas, particularly in developing countries, by providing direct loans and loan guarantees to projects that meet its guidelines.
A) Bank of America Merrill Lynch
B) Export-Import Bank of the United States
C) Wells Fargo Securities
D) US Small Business Administration
E) Overseas Private Investment Corporation

Accepted Answer

Overseas Private Investment Corporation (OPIC) is an organization that helps U.S. businesses invest overseas, particularly in developing countries. It provides direct loans and loan guarantees to projects that meet its guidelines.

Question 9

The _____ is the contract between the exporter and the carrier, authorizing the carrier to transport the goods to the buyer's destination.
A) letter of credit
B) bill of lading
C) customs invoice
D) export declaration
E) license

Accepted Answer

The bill of lading is the document that serves as a contract between the exporter and the carrier, authorizing the carrier to transport the goods to the buyer's destination. The letter of credit is a financial document that guarantees payment to the exporter, while the customs invoice and export declaration provide information about the goods being shipped. A license is a document that grants permission to engage in a specific activity or business.

Question 10

Which of the following statements holds true for the time draft?
A) The time draft is paid on the receipt of the goods by the importer.
B) The time draft is payable typically 30, 60, 90, or 120 days in the future as specified by the draft.
C) The time draft is paid on receipt of the draft (when it is "seen").
D) The time draft is paid in advance immediately after the order is made to the exporter and before the export of the ordered goods.
E) The time draft is paid after a period of exactly one year after the delivery has been made to the importer.

Accepted Answer

A time draft is a type of financial document that allows the exporter to receive payment from the importer after a specified period of time (usually 30, 60, 90, or 120 days). The payment is not made on receipt of the goods but rather after a specific period of time as specified by the draft. Choice A is incorrect because the payment is not made on the receipt of the goods but rather after a specific period of time. Choice C is incorrect because a time draft is not paid on receipt of the draft but rather after a specific period of time as specified by the draft. Choice D is incorrect because a time draft is not paid in advance, but rather after a specified period of time. Choice E is incorrect because the payment is not made after exactly one year but rather after the time period specified in the draft.

Question 11

Which of the following statements holds true for cash in advance?
A) It is an arrangement in which the exporter ships the goods and then bills the importer.
B) It is an arrangement in which an exporter is paid immediately on receipt of the bill of exchange.
C) It is an arrangement in which an exporter sells a time draft at a discount to an intermediary that will pay the exporter immediately and then collect the full amount from the importer at the later date.
D) It is an arrangement in which the exporter is paid exactly one year after the delivery has been made to the importer.
E) It is an arrangement in which the exporter requires payment from the importer before shipping the goods.

Accepted Answer

Cash in advance is an arrangement in which the exporter requires payment from the importer before shipping the goods. This ensures that the exporter receives payment before taking any risk in the transaction.

Question 12

A carrier refers to the entity which:
A) handles the physical transportation of goods across geographical distances.
B) buys goods from another country and transfers into one's home country.
C) sends goods out of one's own country to another country.
D) finances the production of goods in a foreign country.
E) designs and develops goods in one's own country.

Accepted Answer

A carrier is responsible for physically transporting goods across geographical distances, whether it be by land, sea, or air. They may own or lease vehicles, vessels, or aircraft to transport goods, and their services are typically contracted by shippers or freight forwarders. The other options (B, C, D and E) do not accurately describe the role of a carrier in the transportation industry.

Question 13

A commercial or customs invoice refers to the:
A) contract between the exporter and the carrier, authorizing the carrier to transport the goods to the buyer's destination.
B) document containing the description of the items being shipped.
C) invoice that declares the country from which the product originates.
D) bill for the goods shipped from the exporter to the importer or buyer.
E) certificate showing the amount of coverage on the goods.

Accepted Answer

A commercial or customs invoice is a document that serves as the bill for the goods being shipped from the exporter to the importer or buyer. It includes details such as the description of the items being shipped, the quantity, and the price. This document is important for customs clearance and for the buyer to make payment for the goods received.

Question 14

Which of the following statements holds true for the sight draft?
A) The sight draft is paid on the receipt of the goods by the importer.
B) The sight draft is payable typically 30, 60, 90, or 120 days in the future as specified by the draft.
C) The sight draft is paid on receipt of the draft (when it is "seen").
D) The sight draft is paid in advance immediately after the order is made to the exporter and before the export of the ordered goods.
E) The sight draft is paid after a period of exactly one year after the delivery has been made to the importer.

Accepted Answer

A sight draft is a type of draft that is payable upon presentation or "sight" by the importer to the bank. The payment is made immediately upon acceptance of the draft by the issuing bank, without any time delay or grace period. Therefore, option C is the correct statement for the sight draft.

Question 15

_____ refers to an organization that helps U.S. exporters who have found a buyer, yet the buyer is unable to get financing for the purchase in his own country.
A) Bank of America Merrill Lynch
B) Export-Import Bank of the United States
C) Wells Fargo Securities
D) Handelsbanken Capital Markets
E) Overseas Private Investment Corporation

Accepted Answer

The Export-Import Bank of the United States provides financing assistance to help U.S. exporters sell their goods and services internationally. This includes providing financing to foreign buyers who are unable to secure financing through traditional methods.

Question 16

The _____ is a legal document issued by a bank at the importer's (or buyer's) request wherein the importer promises to pay a specified amount of money when the bank receives documents about the shipment.
A) export declaration
B) license
C) letter of credit
D) bill of lading
E) customs invoice

Accepted Answer

The definition given in the question perfectly matches the description of a letter of credit.

Question 17

_____ is the document by which the exporter tells the importer to pay a specified amount at a specified time.
A) Letter of credit
B) Bill of lading
C) Customs invoice
D) Insurance certificate
E) Bill of exchange

Accepted Answer

The document by which the exporter tells the importer to pay a specified amount at a specified time is a bill of exchange. A letter of credit is an instrument in which a bank guarantees payment to the exporter, a bill of lading is a document that shows ownership of goods, a customs invoice lists the goods being shipped and their values, and an insurance certificate confirms that shipment is insured.

Question 18

_____ refers to an organization that assists foreign companies in exporting their products to Japan by providing free-market entry information and business-partner matching as well as some subsidies.
A) Japan Bank for International Cooperation
B) Japan External Trade Organization
C) Development Bank of Japan
D) Master Trust Bank of Japan
E) Japan Post Bank Company

Accepted Answer

Japan External Trade Organization (JETRO) assists foreign companies in exporting their products to Japan by providing free-market entry information and business-partner matching as well as some subsidies. The other options, such as Japan Bank for International Cooperation, Development Bank of Japan, Master Trust Bank of Japan, and Japan Post Bank Company are not specifically focused on assisting foreign companies in exporting to Japan.

Question 19

Which of the following statements holds true for export declaration?
A) It is a document that authorizes the carrier to transport the goods to the buyer's destination.
B) It is a document that contains the description of the items being shipped.
C) It is a document that acts as proof that the shipment was made and that the goods have been received.
D) It is a document that represents the bill for the goods shipped from the exporter to the importer or buyer.
E) It is a document that shows the amount of coverage on the goods.

Accepted Answer

An export declaration is a document that contains the description of the items being shipped. It is used for customs purposes and helps the authorities to determine the applicable duties and taxes.

Question 20

_____ refers to a contract that specifies the performance standards that an outsourcer must meet to ensure quality and performance when outsourcing services.
A) Operational level agreement
B) Service-level agreement
C) Smithsonian Agreement
D) Termination agreement
E) Repurchase agreement

Accepted Answer

A service-level agreement (SLA) is a contract that specifies the performance standards that an outsourcer must meet to ensure quality and performance when outsourcing services. It outlines what services will be provided, the agreed-upon level of service, and the responsibilities of both the service provider and the client. It serves as a tool for managing expectations and ensuring that service delivery meets the needs of the client.

Quiz 9: Exporting, Importing, and Global Sourcing

The term _____ refers to a situation in which an exporter sells a time draft at a discount to an intermediary (often a bank) that will pay the exporter immediately and then collect the full amount from the importer at the later date.

Due to national security or product scarcity, some governments require that organizations need to acquire a(n) _____, which refers to the permission to export goods.

Which of the following statements holds true for an open account?

A _____ typically prepares the documentation, suggests shipping methods, navigates trade regulations, and assists with details like packing and labeling.

Which of the following statements holds true for insurance certificates?

Which of the following statements is true about distributors?

_____ refers to the financing granted against collateral, which can be the imported/exported goods.

_____ refers to an organization that helps U.S. businesses invest overseas, particularly in developing countries, by providing direct loans and loan guarantees to projects that meet its guidelines.

The _____ is the contract between the exporter and the carrier, authorizing the carrier to transport the goods to the buyer's destination.

Which of the following statements holds true for the time draft?

Which of the following statements holds true for cash in advance?

A carrier refers to the entity which:

A commercial or customs invoice refers to the:

Which of the following statements holds true for the sight draft?

_____ refers to an organization that helps U.S. exporters who have found a buyer, yet the buyer is unable to get financing for the purchase in his own country.

The _____ is a legal document issued by a bank at the importer's (or buyer's) request wherein the importer promises to pay a specified amount of money when the bank receives documents about the shipment.

_____ is the document by which the exporter tells the importer to pay a specified amount at a specified time.

_____ refers to an organization that assists foreign companies in exporting their products to Japan by providing free-market entry information and business-partner matching as well as some subsidies.

Which of the following statements holds true for export declaration?

_____ refers to a contract that specifies the performance standards that an outsourcer must meet to ensure quality and performance when outsourcing services.