Question 1

Incoterms are divided into two basic categories:
A) open account and L/C.
B) general and water transport terms.
C) ship and ground transport.
D) export and domestic shipments.
E) risk and nonrisk terms of sale (buyer's perspective).

Accepted Answer

Incoterms are divided into two categories- general and water transport terms. The general terms apply to all modes of transport, while the water transport terms are specifically for shipments by sea or inland waterway. The other options listed are not accurate categorizations of the Incoterms.

Question 2

The U.S. Export-Import Bank (Ex-Im Bank) offers the following:
A) export credit insurance.
B) guarantees.
C) direct and intermediary loans.
D) Working Capital Guarantee.
E) all of the above.

Accepted Answer

The U.S. Export-Import Bank (Ex-Im Bank) offers all of the above services, which includes export credit insurance, guarantees, direct and intermediary loans, and working capital guarantee.

Question 3

The Gold Key Service provided through many American embassies offers companies the following:
A) orientation briefings.
B) market research.
C) introductions to potential partners.
D) assistance in developing a marketing strategy for the particular country.
E) all of the above.

Accepted Answer

The Gold Key Service provided by American embassies offers all of the above services, including orientation briefings, market research, introductions to potential partners, and assistance in developing a marketing strategy for a particular country.

Question 4

"Comparing the total cost of ocean freight versus air freight, air freight may be cheaper." What components are considered when making the previous statement?
A) Insurance rates
B) Packing
C) Replacement cost of damaged goods
D) Inventory cost
E) All of the above

Accepted Answer

The statement considers various components that can affect the total cost of shipping, including insurance rates (since air freight may require lower insurance premiums due to shorter transit times and potentially lower risk of damage), packing (air freight may require less packaging due to less handling), replacement cost of damaged goods (air freight might have a lower risk of damage, reducing potential replacement costs), and inventory cost (air freight's faster delivery can reduce inventory holding costs). Therefore, all these factors (A, B, C, D) are relevant when comparing the total cost of ocean versus air freight.

Question 5

Export marketing plans should be specific about:
A) the markets to be developed.
B) the marketing strategy for servicing them.
C) the tactics required to make the strategy operational.
D) cash flow projections.
E) A, B, and C.

Accepted Answer

Export marketing plans should be specific about the markets to be developed, the marketing strategy for servicing them, and the tactics required to make the strategy operational. Cash flow projections are also necessary, but they are not the only important aspect of an export marketing plan. Therefore, the best choice is E, which includes all of the above.

Question 6

A shipper's export declaration (SED) includes:
A) names and addresses of the shipper and consignee.
B) U.S. port of exit and foreign port of unloading.
C) export license number and bill-of-lading number.
D) description and value of the goods.
E) all of the above.

Accepted Answer

A shipper's export declaration (SED) includes all of the above information, including names and addresses of the shipper and consignee, U.S. port of exit and foreign port of unloading, export license number and bill-of-lading number, and description and value of the goods. All of this information is necessary for the U.S. government to monitor and regulate exports, as well as for logistical purposes.

Question 7

Incoterms are developed and maintained by:
A) the U.S. Chamber of Commerce.
B) the International Chamber of Commerce.
C) the WTO.
D) the UN.
E) a committee of major global companies.

Accepted Answer

Incoterms are developed and maintained by the International Chamber of Commerce.

Question 8

The premiums charged by marine insurance companies on an international transaction depend on:
A) the age of the ship.
B) whether the goods are stowed on deck or under deck.
C) the volume of business.
D) how the good are packed.
E) all of the above.

Accepted Answer

The premiums charged by marine insurance companies on an international transaction depend on a variety of factors, including the age of the ship, where the goods are stowed, the volume of business, and how the goods are packed. Therefore, all of the above choices are correct.

Question 9

What is an export license?
A) Permission from the U.S. government to export
B) An international quality performance rating
C) A shipping qualification
D) Permission from the top management team to export
E) Permission to transfer domestic currency abroad

Accepted Answer

An export license is a permission obtained from the U.S. government that grants the right to legally export goods or services to another country. The license ensures that the items being exported comply with international regulations and do not pose a threat to national security.

Question 10

The total number of Incoterms as of 2011 is:
A) 11.
B) 25.
C) 15.
D) variable. (They vary as need dictates.)
E) 45

Accepted Answer

As of 2011, the total number of Incoterms is 11. These terms are used to define the obligations and responsibilities of buyers and sellers in international trade transactions.

Question 11

The Department of Commerce organizes events called "Show and Sells" that are helpful in both locating foreign representatives and making sales. Which of the following is not an event offered by the Department of Commerce?
A) U.S. pavilions
B) Reverse trade missions
C) Product literature center
D) Education seminars
E) None of the above

Accepted Answer

Education seminars are not offered by the Department of Commerce.

Question 12

Freight forwarders' responsibilities may include all of the following except:
A) booking space on a ship.
B) preparing the export documents.
C) verifying that the seller has money in the bank.
D) arranging to have the merchandise delivered to the port.
E) D and C.

Accepted Answer

Verifying that the seller has money in the bank is not typically a responsibility of a freight forwarder. Their main duties involve coordinating and arranging the shipment of goods, including booking space on a ship, preparing export documents, and arranging for delivery to the port.

Question 13

Which of the following is the most risky for an importer?
A) Open account
B) Irrevocable letter of credit
C) Bank collection time draft
D) Cash in Advance
E) None of the above

Accepted Answer

Cash in Advance is the least risky option for an importer, as payment is received before the goods are shipped, eliminating the risk of non-payment or payment delay.

Question 14

An export bill of lading serves as:
A) a contract for carriage between the shipper and the carrier.
B) a receipt from the carrier for the goods shipped.
C) a certificate of ownership.
D) a receipt for the IRS.
E) A, B, and C.

Accepted Answer

An export bill of lading serves as a contract for carriage between the shipper and the carrier, a receipt from the carrier for the goods shipped, and a certificate of ownership.

Question 15

The kinds of marine insurance policies include:
A) basic named perils.
B) broad named perils.
C) partial risk.
D) all risk.
E) A, B, and D.

Accepted Answer

The best choice is E because it includes all three types of marine insurance policies that are commonly used: basic named perils, broad named perils, and all risk. Partial risk is not a typical type of marine insurance policy. Therefore, E is the best choice because it includes all the relevant options.

Question 16

Collection documents vary from country to country. The most common types of collection documents that the seller provides to the buyer include all of the following except:
A) commercial invoices.
B) consular invoices.
C) income statements.
D) certificates of origin.

Accepted Answer

While commercial invoices, consular invoices, and certificates of origin are typical collection documents, income statements are not typically provided to the buyer. Income statements are internal financial documents used by companies to track their revenue and expenses.

Question 17

Foreign trade zones are also called:
A) free trade zones.
B) transit zones.
C) free perimeters.
D) export processing zones.
E) all of the above.

Accepted Answer

Foreign trade zones are known by various names around the world, including free trade zones, transit zones, and export processing zones. Each of these terms refers to designated areas where goods can be imported, handled, manufactured, or reconfigured without being subject to the host country's standard import regulations or tariffs until they enter its general market.

Question 18

On a consignment sale, the payment risk is:
A) assumed by the buyer.
B) assumed to be equally shared.
C) carried by the seller.
D) covered by insurance.
E) covered by the bank issuing the L/C.

Accepted Answer

In a consignment sale, the seller retains ownership of the goods until they are sold, and therefore carries the payment risk. This means the seller is at risk of not receiving payment for the goods if they are not sold or if the buyer defaults on payment. It is the seller's responsibility to ensure that they have a secure payment arrangement in place before entering into a consignment sale.

Question 19

Ex-Works is a short way to say:
A) cash in advance.
B) an open account.
C) consignment.
D) letters of credit.
E) shipment transferred to seller at factory.

Accepted Answer

Ex-Works refers to a trade term in which the seller is responsible for making the goods available at their factory or warehouse. Once the goods are made available, the buyer takes full responsibility for all transport, customs clearance, and other related costs and risks. It does not include any shipping costs, insurance, or other related expenses. Therefore, the correct choice is E, which states that it is shipment transferred to the seller at the factory.

Question 20

Which of the following is the most risky for an exporter?
A) Open account
B) Irrevocable letter of credit
C) Bank collection time draft
D) Cash in advance
E) Revocable letter of credit

Accepted Answer

The answer of Which of the following is the most...

Quiz 14: Export and Import Practices

Incoterms are divided into two basic categories:

The U.S. Export-Import Bank (Ex-Im Bank) offers the following:

The Gold Key Service provided through many American embassies offers companies the following:

"Comparing the total cost of ocean freight versus air freight, air freight may be cheaper." What components are considered when making the previous statement?

Export marketing plans should be specific about:

A shipper's export declaration (SED) includes:

Incoterms are developed and maintained by:

The premiums charged by marine insurance companies on an international transaction depend on:

What is an export license?

The total number of Incoterms as of 2011 is:

The Department of Commerce organizes events called "Show and Sells" that are helpful in both locating foreign representatives and making sales. Which of the following is not an event offered by the Department of Commerce?

Freight forwarders' responsibilities may include all of the following except:

Which of the following is the most risky for an importer?

An export bill of lading serves as:

The kinds of marine insurance policies include:

Collection documents vary from country to country. The most common types of collection documents that the seller provides to the buyer include all of the following except:

Foreign trade zones are also called:

On a consignment sale, the payment risk is:

Ex-Works is a short way to say:

Which of the following is the most risky for an exporter?