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MUST International Trade Practice (Fall 2011)
Problem Set 3: Ch7 Terms of Payment
MULTIPLE CHOICE ( Please write down on your answer sheet the correct answer and explain briefly).
1. Among other reasons, international transactions are perceived to have more risk of non-payment because of
a. | a lack of credit information. | d. | All of the above |
b. | a lack of personal contact. | e. | None of the above |
c. | no easy legal recourse. |
2. In attempting a credit check of a foreign firm, a basic problem is
a. | There is generally much less information available on the creditworthiness of a creditor in a foreign market, | d. | All of the above |
b. | most international banks are corrupt. | e. | None of the above |
c. | most countries avoid international trade. |
ANS: A
There is generally much less information available on the creditworthiness of a creditor in a foreign market, coupled with an unfamiliarity with the diverse business organizations and with an inability to decipher businesses’ names.
DIF: Easy REF: 7-1
3. The risk(s) that an exporter takes in requesting cash in advance as a means of payment is/are
a. | fluctuations in the exchange rate. | d. | All of the above |
b. | it puts the exporter at a competitive disadvantage. | e. | None of the above |
c. | it can increase inventory stockouts. |
4. This question is deleted.
5. International commercial risk can be evaluated by
a. | credit report companies. | d. | All of the above |
b. | factoring houses. | e. | None of the above |
c. | some accounting firms, insurance companies, and banks. |
6. SWIFT stands for
a. | Southwestern International Fund Transfers. | d. | Society for Worldwide Institutional Transfers. |
b. | Sales World Institutional Financial Telecommunications. | e. | Society for Worldwide Interbank Financial Telecommunication |
c. | Serving-the-World Institutional Financial Transactions. |...