International Trade Practice

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. |...