Question 1

In domestic trade transactions, a buyer can often obtain possession of merchandise without signing a formal document acknowledging his or her obligation to pay.

Accepted Answer

A) True 
 B)False

Question 2

To cater to the growing demand for luxury automobiles, Italy agrees to buy 5,000 cars from Comfort Cars Inc. in exchange for 5,000 barrels of oil. Since Comfort Cars Inc. is not seen as creditworthy, Italy decides to make this a one-time-only deal. What form of countertrade is Italy using?

Accepted Answer

A)   counterpurchase
B)   offset
C)   switch trading
D)   barter
E)   buyback

Question 3

Peterson Manufacturing wants to import a machine from Germany. However, the company's head of manufacturing is reluctant to spend the time required to obtain a letter of credit that the German exporter insists on. You are the company's CFO. What advantage of a letter of credit will help convince the head of manufacturing that this is worthwhile?

Accepted Answer

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.

Question 4

It often makes sense for a firm to enter a foreign market on a large scale to reduce the costs of any subsequent failure.

Accepted Answer

A) True 
 B)False

Question 5

Exporting is nearly always a way to increase the revenue and profit base of a company because

Accepted Answer

A)   there is little competition in the international market.
B)   foreign governments encourage imports from other countries.
C)   international markets are less complex than their domestic counterparts.
D)   the international market is much larger than the domestic market.
E)   it does not involve wasting resources on paperwork.

Question 6

A U.S. company would invest in export credit insurance when it

Accepted Answer

A)   is exposed to the risk that an 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 barter-like agreement.

Question 7

Manatee Products, a U.S. company, is exporting to a Japanese company. The two parties agree on a draft, but Manatee Products wants it to be a draft that is payable on presentation to the Japanese company. Manatee Products is asking for a(n)

Accepted Answer

A)   bill of lading.
B)   sight draft.
C)   letter of credit.
D)   time draft.
E)   offset.

Question 8

Describe the types of companies that benefit most from countertrade.

Accepted Answer

Countertrade is most attractive to large...

Question 9

Once accepted by the drawee, a time draft becomes a(n)

Accepted Answer

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 held by the bank.

Question 10

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

Accepted Answer

A)   barter.
B)   counterpurchase.
C)   compensation.
D)   switch trading.
E)   buyback.

Question 11

Mulch-Rite Inc., based in Germany, has contracted with a company in Italy to export twenty tons of mulch. Mulch-Rite has written an order requesting that the Italian company pay €15,000 by June 15 prior to the shipping date. This order is an example of a

Accepted Answer

A)   bill of lading.
B)   draft.
C)   letter of credit.
D)   counterpurchase.
E)   buyback.

Question 12

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. What type of countertrade arrangement are the two parties engaged in?

Accepted Answer

A)   switch trading
B)   buyback
C)   counterpurchase
D)   barter
E)   compensation

Question 13

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

Accepted Answer

A)   countertrade.
B)   carry trade.
C)   free trade.
D)   counter sale.
E)   countervailing duty.

Question 14

In the United States, export credit insurance is provided by the

Accepted Answer

A)   Export-Import Bank.
B)   Bank of New York.
C)   Foreign Credit Insurance Association.
D)   Federal Deposit Insurance Corporation.
E)   Federal Reserve Bank.

Question 15

The Small Business Administration coordinates a group of ________ in the ELAN program who provide free initial consultations to small businesses on export matters.

Accepted Answer

A)   engineers
B)   politicians
C)   accountants
D)   attorneys
E)   networkers

Question 16

How does the Small Business Administration (SBA) help potential exporters?

Accepted Answer

The Small Business Administration (SBA) is a government organization that helps potential exporters. The SBA 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. Through its Service Corps of Retired Executives (SCORE) program, the SBA oversees some 11,500 volunteers with international trade experience to provide one-on-one counseling to active and new-to-export businesses. The SBA also coordinates the Export Legal Assistance Network (ELAN), a nationwide group of international trade attorneys who provide free initial consultations to small businesses on export-related matters.

Question 17

From an exporter's perspective, why is an offset more attractive than a straight counterpurchase agreement?

Accepted Answer

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 in another country.
E)   It allows direct exchange of goods and/or services between two parties without a cash transaction. B

Question 18

A countertrade indicates the exchange of money for goods and services.

Accepted Answer

A) True 
 B)False

Question 19

A common pitfall that novice exporters come across involves

Accepted Answer

A)   poor understanding of the domestic market.
B)   low unit costs.
C)   increased economies of scale.
D)   problems securing financing.
E)   familiar distribution systems. D

Question 20

Countertrade's main attraction is that it can give a firm a way to finance an export deal when other means are not available.

Accepted Answer

A) True 
 B)False

Exam 14: Exporting, Importing, and Countertrade

In domestic trade transactions, a buyer can often obtain possession of merchandise without signing a formal document acknowledging his or her obligation to pay.

Correct Answer
verified

To cater to the growing demand for luxury automobiles, Italy agrees to buy 5,000 cars from Comfort Cars Inc. in exchange for 5,000 barrels of oil. Since Comfort Cars Inc. is not seen as creditworthy, Italy decides to make this a one-time-only deal. What form of countertrade is Italy using?

Correct Answer
verified

Correct Answer
verified

It often makes sense for a firm to enter a foreign market on a large scale to reduce the costs of any subsequent failure.

Correct Answer
verified

Exporting is nearly always a way to increase the revenue and profit base of a company because

Correct Answer
verified

A U.S. company would invest in export credit insurance when it

Correct Answer
verified

Manatee Products, a U.S. company, is exporting to a Japanese company. The two parties agree on a draft, but Manatee Products wants it to be a draft that is payable on presentation to the Japanese company. Manatee Products is asking for a(n)

Correct Answer
verified

Describe the types of companies that benefit most from countertrade.

Correct Answer
verified
Countertrade is most attractive to large...
View Answer

Once accepted by the drawee, a time draft becomes a(n)

Correct Answer
verified

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

Correct Answer
verified

Mulch-Rite Inc., based in Germany, has contracted with a company in Italy to export twenty tons of mulch. Mulch-Rite has written an order requesting that the Italian company pay €15,000 by June 15 prior to the shipping date. This order is an example of a

Correct Answer
verified

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. What type of countertrade arrangement are the two parties engaged in?

Correct Answer
verified

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

Correct Answer
verified

In the United States, export credit insurance is provided by the

Correct Answer
verified

The Small Business Administration coordinates a group of ________ in the ELAN program who provide free initial consultations to small businesses on export matters.

Correct Answer
verified

How does the Small Business Administration (SBA) help potential exporters?

From an exporter's perspective, why is an offset more attractive than a straight counterpurchase agreement?

Correct Answer
verified
B

A countertrade indicates the exchange of money for goods and services.

Correct Answer
verified

A common pitfall that novice exporters come across involves

Correct Answer
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D

Countertrade's main attraction is that it can give a firm a way to finance an export deal when other means are not available.

Correct Answer
verified

Exam 14: Exporting, Importing, and Countertrade

In domestic trade transactions, a buyer can often obtain possession of merchandise without signing a formal document acknowledging his or her obligation to pay.

Correct AnswerverifiedShow Answer

To cater to the growing demand for luxury automobiles, Italy agrees to buy 5,000 cars from Comfort Cars Inc. in exchange for 5,000 barrels of oil. Since Comfort Cars Inc. is not seen as creditworthy, Italy decides to make this a one-time-only deal. What form of countertrade is Italy using?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

It often makes sense for a firm to enter a foreign market on a large scale to reduce the costs of any subsequent failure.

Correct AnswerverifiedShow Answer

Exporting is nearly always a way to increase the revenue and profit base of a company because

Correct AnswerverifiedShow Answer

A U.S. company would invest in export credit insurance when it

Correct AnswerverifiedShow Answer

Manatee Products, a U.S. company, is exporting to a Japanese company. The two parties agree on a draft, but Manatee Products wants it to be a draft that is payable on presentation to the Japanese company. Manatee Products is asking for a(n)

Correct AnswerverifiedShow Answer

Describe the types of companies that benefit most from countertrade.

Correct AnswerverifiedCountertrade is most attractive to large...View AnswerShow Answer

Once accepted by the drawee, a time draft becomes a(n)

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Mulch-Rite Inc., based in Germany, has contracted with a company in Italy to export twenty tons of mulch. Mulch-Rite has written an order requesting that the Italian company pay €15,000 by June 15 prior to the shipping date. This order is an example of a

Correct AnswerverifiedShow Answer

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. What type of countertrade arrangement are the two parties engaged in?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In the United States, export credit insurance is provided by the

Correct AnswerverifiedShow Answer

The Small Business Administration coordinates a group of ________ in the ELAN program who provide free initial consultations to small businesses on export matters.

Correct AnswerverifiedShow Answer

How does the Small Business Administration (SBA) help potential exporters?

From an exporter's perspective, why is an offset more attractive than a straight counterpurchase agreement?

Correct AnswerverifiedB

A countertrade indicates the exchange of money for goods and services.

Correct AnswerverifiedShow Answer

A common pitfall that novice exporters come across involves

Correct AnswerverifiedD

Countertrade's main attraction is that it can give a firm a way to finance an export deal when other means are not available.

Correct AnswerverifiedShow Answer

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Countertrade is most attractive to large...
View Answer

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B

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D

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