Question 1

Exporting is often not an end in itself, but merely a step on the road toward establishment of foreign production.

Accepted Answer

A) True 
 B)False

Question 2

The list provided by the International Trade Administration to a potential exporter with the names and addresses of potential distributors in foreign markets, along with businesses they are in, is called the:

Accepted Answer

A)  ELAN list.
B)  "best prospects" list.
C)  "comparison shopping service."
D)  SCORE list.
E)  export management list.F) B) and D)
G) A) and B)

Question 3

Which of the following is a common pitfall that novice exporters come across?

Accepted Answer

A)  Poor understanding of the opportunities in the domestic market
B)  Low unit costs
C)  Increased economies of scale
D)  Problems securing financing
E)  Familiar distribution systemsF) B) and E)
G) B) and D)

Question 4

Repayment of medium- and long-term loans U.S. commercial banks make to foreign borrowers for purchasing U.S. exports is guaranteed by the:

Accepted Answer

A)  United Nations.
B)  Central Bank.
C)  World Bank.
D)  Ex-Im Bank.
E)  Export Credit Insurance Association.F) A) and B)
G) C) and D)

Question 5

Which of the following is a way in which the U.S. Department of Commerce helps potential exporters?

Accepted Answer

A)  It oversees volunteers with international trade experience and directs them to provide one-on-one counseling to active and new-to-export businesses.
B)  It assembles a "comparison shopping service" for 14 countries that are major markets for U.S. exports.
C)  It coordinates a nationwide group of international trade attorneys who provide free initial consultations to small businesses on export-related matters.
D)  It provides export specialists who act as the export marketing departments or international departments for their client firms.
E)  It starts exporting operations for firms until they are well established.F) A) and B)
G) A) and D)

Question 6

Which of the following is true of a letter of credit?

Accepted Answer

A)  It states that the bank will pay a specified sum of money to a beneficiary on presentation of particular, specified documents.
B)  It is a document written by an exporter instructing an importer to pay a specified amount of money at a specified time.
C)  It serves as a receipt, a contract, and a document of title.
D)  It indicates that the carrier has received the merchandise described on the face of the document.
E)  It allows buyers to obtain possession of merchandise without signing a formal document acknowledging his or her obligation to pay.F) B) and D)
G) None of the above

Question 7

Representatives of the U.S. Department of Commerce accompany groups of U.S. businesspeople abroad to meet with qualified agents, distributors, and customers, as part of the:

Accepted Answer

A)  matchmaker program.
B)  "best prospects" listing.
C)  SCORE program.
D)  "comparison shopping service."
E)  export-import program.F) B) and E)
G) None of the above

Question 8

Which of the following refers to an export specialist that acts as an export marketing department for client firms?

Accepted Answer

A)  Export management company
B)  Export-import firm
C)  Foreign direct investment management firm
D)  Strategy management company
E)  Association of export companiesF) A) and E)
G) B) and E)

Question 9

Which of the following drafts allows for a delay in payment?

Accepted Answer

A)  Sight draft
B)  Time draft
C)  Bill of lading
D)  Counterpurchase
E)  OffsetF) D) and E)
G) A) and E)

Question 10

Reactive firms do not consider exporting until their domestic market is saturated.

Accepted Answer

A) True 
 B)False

Question 11

In international commerce, the party initiating a draft is known as the:

Accepted Answer

A)  maker.
B)  drawee.
C)  buyer.
D)  agent.
E)  drafter.F) C) and E)
G) B) and D)

Question 12

Why do many neophyte exporters have problems when trying to do business abroad for the first time? What are the common pitfalls experienced by such exporters?

Accepted Answer

Neophyte exporters tend to underestimate...

Question 13

An exporter has to forgo a letter of credit when:

Accepted Answer

A)  competing exporters also require letters of credit.
B)  the importer is facing stiff competition from other importers.
C)  the exporter is a dominant player in a noncompetitive market.
D)  the importer is in a strong bargaining position.
E)  he or she knows that the importer will default on payment.F) A) and B)
G) A) and C)

Question 14

A letter of credit may reduce an importer's ability to borrow funds for other purposes.

Accepted Answer

A) True 
 B)False

Question 15

Briefly describe the various financial devices that help exporters solve the problem of a lack of trust in international trade.

Accepted Answer

The financial devices that have evolved ...

Question 16

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 to purchase goods from another country.
E)  It allows direct exchange of goods and/or services between two parties without a cash transaction.F) B) and E)
G) All of the above

Question 17

A draft, an instrument normally used in international commerce to effect payment, is also known as a letter of credit.

Accepted Answer

A) True 
 B)False

Question 18

The most comprehensive source of information on export opportunities for U.S. firms is the:

Accepted Answer

A)  Small Business Administration.
B)  Department of Commerce.
C)  Federal Trade Commission.
D)  Bureau of Competition.
E)  Bank of New York.F) A) and B)
G) C) and D)

Question 19

The advantage of export management companies (EMCs) is that they are experienced specialists that can help the neophyte exporter identify opportunities and avoid common pitfalls.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is true of exporting?

Accepted Answer

A)  It takes a very short time before all foreigners are comfortable enough to purchase in significant quantities.
B)  Novice exporters tend to overestimate the time required to cultivate business in foreign countries.
C)  Exporters often face voluminous paperwork, complex formalities, and many potential delays and errors.
D)  Large firms are usually unfamiliar with foreign market opportunities.
E)  Large firms do not consider exporting until their domestic market is saturated.F) A) and D)
G) B) and E)

Exam 14: Exporting, Importing, and Countertrade

A letter of credit may reduce an importer's ability to borrow funds for other purposes.

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

Correct AnswerverifiedShow Answer

Exporting is often not an end in itself, but merely a step on the road toward establishment of foreign production.

Correct AnswerverifiedShow Answer

Which of the following is a way in which the U.S. Department of Commerce helps potential exporters?

Correct AnswerverifiedShow Answer

In international commerce, the party initiating a draft is known as the:

Correct AnswerverifiedShow Answer

A draft, an instrument normally used in international commerce to effect payment, is also known as a letter of credit.

Correct AnswerverifiedShow Answer

Which of the following is true of exporting?

Correct AnswerverifiedShow Answer

Repayment of medium- and long-term loans U.S. commercial banks make to foreign borrowers for purchasing U.S. exports is guaranteed by the:

Correct AnswerverifiedShow Answer

The list provided by the International Trade Administration to a potential exporter with the names and addresses of potential distributors in foreign markets, along with businesses they are in, is called the:

Correct AnswerverifiedShow Answer

The most comprehensive source of information on export opportunities for U.S. firms is the:

Correct AnswerverifiedShow Answer

Which of the following refers to an export specialist that acts as an export marketing department for client firms?

Correct AnswerverifiedShow Answer

Which of the following is a common pitfall that novice exporters come across?

Correct AnswerverifiedShow Answer

Why do many neophyte exporters have problems when trying to do business abroad for the first time? What are the common pitfalls experienced by such exporters?

Correct AnswerverifiedNeophyte exporters tend to underestimate...View AnswerShow Answer

An exporter has to forgo a letter of credit when:

Correct AnswerverifiedShow Answer

Reactive firms do not consider exporting until their domestic market is saturated.

Correct AnswerverifiedShow Answer

Briefly describe the various financial devices that help exporters solve the problem of a lack of trust in international trade.

Correct AnswerverifiedThe financial devices that have evolved ...View AnswerShow Answer

Representatives of the U.S. Department of Commerce accompany groups of U.S. businesspeople abroad to meet with qualified agents, distributors, and customers, as part of the:

Correct AnswerverifiedShow Answer

Which of the following is true of a letter of credit?

Correct AnswerverifiedShow Answer

The advantage of export management companies (EMCs) is that they are experienced specialists that can help the neophyte exporter identify opportunities and avoid common pitfalls.

Correct AnswerverifiedShow Answer

Which of the following drafts allows for a delay in payment?

Correct AnswerverifiedShow Answer

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Neophyte exporters tend to underestimate...
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The financial devices that have evolved ...
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