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International Financial Management Study Set 9

Business

Quiz 17 :

Financing International Trade

Quiz 17 :

Financing International Trade

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____ promises to pay the beneficiary if they buyer fails to pay as agreed.
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Answer:

A

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Who bears the payment risk in a letter of credit?
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Answer:

C

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The commission earned by the bank for accepting a draft is reflected in the all-in-rate.
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True False
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Answer:

True

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In a countertrade transaction, banks on both ends act as intermediaries in the processing of shipping documents and the collection of payment.
True False
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The all-in-rate a bank charges its customer(s) for accepting drafts includes both the discount rate and the acceptance commission.
True False
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Under a letter of credit, the exporter will not ship the goods until the buyer has remitted payment to the exporter.
True False
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The term counterpurchase denotes the exchange of goods between two parties under two distinct contracts expressed in monetary terms.
True False
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A banker's acceptance is a draft drawn on and accepted by a(n) ____.
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An exchange of goods between two parties under two distinct contracts expressed in monetary terms is:
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In an open account transaction, the exporter ships the goods to the importer but retains title to the goods until they have been sold.
True False
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There is an active secondary market for banker's acceptances.
True False
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From a bank's viewpoint, issuing a letter of credit is analogous to making a loan as far as risk is concerned.
True False
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If shipment is made under a forfaiting draft, the exporter is paid once shipment has been made and the draft is presented to the buyer for payments.
True False
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The risk to the exporter is highest with the ____ method.
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Which of the following is not a payment method used for international trade?
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MNCs can use ____ to sell their existing accounts receivable as a means of obtaining cash.
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Under a(n) ____ arrangement, the exporter ships the goods to the importer while still retaining actual title to the merchandise.
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Under prepayment, the exporter will not ship the goods until the buyer has remitted payment to the exporter.
True False
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With ____, the exporter ships the goods to the importer while still retaining actual title to the merchandise.
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A bill of exchange requesting the bank to pay the face amount at a future date is a:
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