QN1: Which of the following is not a disadvantage of using an indirect channel?
a. The supplier loses control over the marketing of its product overseas
b. The manufacturer loses control over the marketing of its product overseas
c. The distributor loses control over the marketing of its product overseas
d. a and b
Answer
Answer: d
QN2: Direct sales can be made through located in a foreign country.
a. Suppliers
b. Manufacturers
c. Agents
d. Investors
Answer
Answer: c
QN3: Direct exporting is likely to provide opportunities for even though it requires a high degree of financial commitment.
a. High profit margins
b. Low profit margins
c. Medium profit margins
d. None of the above
Answer
Answer: a
QN4: The choice of channel structure is primarily dictated by .
a. Marketing objectives of the firm
b. Market supply
c. Manufacturer’s talent and overall ability
d. Demand consideration
Answer
Answer: a
QN5: In a study on export channels of distribution in the United States, percent of the respondents indicated that the distribution of goods in a foreign country was primarily dictated by the market, while percent stated the choice was dictated by the nature of the exported product.
a. 52.7; 15.5
b. 52.7; 15.4
c. 51.3; 15.5
d. 51.3; 15.4
Answer
Answer: a
QN6: U.S. sales to Canada are characterized by:
a. Long (direct) channels
b. Long (indirect) channels
c. Short (direct) channels
d. Short (indirect) channels
Answer
Answer: c
QN7: Which two types of controls are available for the manufacturer and exporter?
a. Process controls and input controls
b. Process controls and output controls
c. Servicing controls and input controls
d. Servicing controls and output controls
Answer
Answer: b
QN8: Disadvantages of using EMCs include:
a. Manufacturer may lose control over foreign sales.
b. EMCs that work on commission may lose interest if sales do not come immediately.
c. Exporters may not learn international business since the EMC does most of the work related to exports.
d. All of the above are disadvantages of using EMCs.
Answer
Answer: d
QN9: Which of the following are the most traditional and dominant intermediary in many countries?
a. Investment companies
b. Servicing companies
c. Distribution companies
d. Trading companies
Answer
Answer: d
QN10: Which of the following describes the difference between trading companies and EMCs?
a. Trading companies offer more diverse product lines than EMCs, which offer more services.
b. Trading companies offer more services and have more diverse product lines than EMCs.
c. Trading companies are largely restricted to export-import activities.
d. EMCs are not restricted to export-import activities.
Answer
Answer: b
QN11: Export commission reside and conduct business in the country and are paid a commission by their clients.
a. Distributors; importer’s; foreign
b. Distributors; exporter’s; foreign
c. Agents; exporter’s; foreign
d. Agents; importer’s; foreign
Answer
Answer: c
QN12: Most export merchants purchase products from?
a. Manufacturers
b. Suppliers
c. Distributors
d. None of the above
Answer
Answer: a
QN13: Which of the following are foreign end users?
a. Schools
b. Hospitals
c. Banks
d. All of the above
Answer
Answer: d
QN14: Which of the following is not a major disadvantage of using an agent?
a. Legal and financial problems in the event of termination
b. The agent assumes the attendant risks and responsibilities, including pricing and delivery to sales service
c. Agents have limited training and knowledge about the product
d. All of the above
Answer
Answer: b (the firm assumes the attendant risks and responsibilities)
QN15: take possession of goods and provide the necessary pre- and postsale services.
a. Agents
b. Suppliers
c. Manufacturers
d. Distributors
Answer
Answer: d
QN16: Some of the disadvantages (for manufacturers) of using distributors are:
a. Limited access to feedback from customers
b. Loss of control over marketing and pricing
c. Limited opportunity to learn international business know-how
d. All of the above
Answer
Answer: d
QN17: In which country are distribution channels inefficient and complex, where the system is characterized by multiple layers of wholesalers who have close relations with other wholesalers, manufacturers, and so on?
a. China
b. India
c. Japan
d. Brazil
Answer
Answer: c
QN18: It is estimated that about percent of global trade is handled through overseas agents and distributors.
a. 48
b. 49
c. 50
d. 51
Answer
Answer: c
QN19: In which countries are representation agreements required to be formally registered with and their contents approved by the appropriate authority?
a. Egypt, Indonesia, Japan, and South Korea
b. Egypt, Indonesia, China, and South Korea
c. Saudi Arabia, Indonesia, Japan, and South Korea
d. Saudi Arabia, Indonesia, China, and South Korea
Answer
Answer: a
QN20: What are parallel (gray) market goods?
a. Goods that enter a country outside of regular, authorized distribution channels
b. Goods that enter a country within the regular, authorized distribution channels
c. Goods that enter a country outside of regular, unauthorized distribution channels
d. Goods that enter a country outside of regular distribution channels
Answer
Answer: a
QN21: In agreements, all sales of products are made in accordance with the price list and discount structure agreed between the parties.
a. Distribution
b. Suppliers’
c. Agency
d. Manufacturing
Answer
Answer: c
QN22: In many countries, issues relating to appointment, renewal, or termination of representatives are largely determined by .
a. Regional laws
b. Local laws
c. International laws
d. Local/regional agreements
Answer
Answer: b
QN23: When are representative agreements terminated?
a. In cases in which one of the parties is guilty of nonperformance
b. In cases in which both parties are guilty of nonperformance
c. In cases of action or omission by one party by the other party
d. None of the above
Answer
Answer: a
QN24: Which of the following does not give rise to the termination of a contract?
a. Bankruptcy
b. Force majeure
c. Change of ownership
d. Change of business name and management
Answer
Answer: d
QN25: Many representative contracts provide that any dispute between the parties shall be submitted to arbitration for final settlement in accordance with the rules of the .
a. International chamber of commerce
b. National chamber of commerce
c. Local chamber of commerce
d. State chamber of commerce
Answer
Answer: a
QN26: The total cost approach:
a. Considers a trade-off in undertaking certain logistics decisions
b. Is a logistics concept based on evaluation of the total cost implications of various activities
c. Is a logistics concept based on the premise that the flow of materials within and outside the firm should be considered only in the context of their interaction.
d. Is all of the above
Answer
Answer: b
QN27: applies to the timely movement of materials from the sources of supply to the point of manufacture, assembly, or distribution.
a. Physical distribution
b. Materials management
c. Supply clusters
d. Logistical procedures
Answer
Answer: b
QN28: The development of advanced logistics systems and capabilities has also increased efficient
, , and of products.
a. Production; transportation; distribution
b. Production; handling; supplying
c. Production; transportation; supplying
d. Production; handling; distribution
Answer
Answer: a
QN29: The reduction of shipping costs and increased productivity has been a result of which two processes?
a. Privatization and regulation
b. Privatization and deregulation
c. Regulation and national standards
d. Nationalization of existing means of production to reduce transportation cost
Answer
Answer: b
QN30: The pressures on firms to reexamine their logistics systems has been largely due to:
a. The proliferation of new products and services
b. The changes in the local and state laws
c. The changes in the international laws
d. All of the above
Answer
Answer: a
QN31: A reexamination of logistics system helps firms:
a. Reduce inventory costs
b. Reduce transportation cost and delivery time
c. Reduce advertising expenditures
d. a and b
Answer
Answer: d
QN32: What factors influence the need for adequate packing of goods?
a. Breakage of goods, moisture, and theft
b. Faster transportation
c. Easier supervision
d. Easier containerization
Answer
Answer: a
QN33: and of cargo has the added advantage of synchronizing promotions and longterm inventory decisions for customers.
a. Tracking; tracing
b. Tracking; servicing
c. Tracing; servicing
d. None of the above
Answer
Answer: a
QN34: Which of the following describes the difference between domestic logistics and international logistics?
a. Domestic logistics requires products to be transported by truck or rail; international logistics requires products to be transported by air or sea.
b. Domestic logistics has different national regulations and many intermediaries participating in the distribution channel; international logistics requires the national regulation on packaging and labeling.
c. a and b
d. None of the above
Answer
Answer: a
QN35: In a typical international logistics process, a pro-forma invoice prepared by the seller:
a. May serve as a service contract
b. May serve as a sales contract
c. May be used to collect merchandise
d. May be used as a contract of shipment
Answer
Answer: b
QN36: Preshipment inspection
a. Is the responsibility of the buyer
b. Is the responsibility of the seller
c. Is used to control illegal flights of capital but delays movement of merchandise
d. a and c
Answer
Answer: d
QN37: In a typical logistics process, after the merchandise is transported, the forwarder sends the necessary documents to:
a. The buyer
b. The customs broker
c. The shipper
d. The inspector in the buyer’s country
Answer
Answer: b
QN38: Denmark held the world’s top spot in logistics. Its excellence in logistics is attributed to which of the following sectors?
a. Investment in infrastructure
b. Human resources
c. Business environment
d. All of the above
Answer
Answer: d
QN39: “Do not roll,” “keep frozen,” or “live animals” are examples of appropriate:
a. Packing for certain products
b. Labeling for certain products
c. Inventory for certain products
d. Packing and labeling for certain products
Answer
Answer: b
QN40: The U.S. Clean Air Act requires which types of products to be labeled?
a. Ozone depleting substances
b. Nuclear depleting substances
c. Oil and gas depleting substances
d. a and b
Answer
Answer: a
QN41: The rigors of long-distance transportation of goods require protection of merchandise from possible breakage, moisture, pilferage, and theft by using appropriate:
a. Packing
b. Labeling
c. Inventory
d. Packing and labeling only
Answer
Answer: a
QN42: Which country requires that approximately 70 percent of packaging material used must be recycled or reused?
a. Norway
b. Finland
c. Britain
d. None of the above
Answer
Answer: d (Germany requires this)
QN43: Which logistics function includes the consolidation of small cargo, documentation, and filing of loss and damage claims?
a. Inventory and storage
b. Traffic management
c. Packing
d. All of the above
Answer
Answer: b
QN44: In international logistics, the most expensive mode of transportation is:
a. Airfreight
b. Sea freight
c. Rail
d. Truck
Answer
Answer: a
QN45: Risks in foreign trade include:
a. War, terrorism, actions of legitimate government authorities to confiscate cargo
b. Nonpayments or delays in payment for imports
c. Loss or damage to shipment during transit
d. All of the above
Answer
Answer: d
QN46: In many developed countries, less than percent of trade debts are insured.
a. 10
b. 15
c. 20
d. 25
Answer
Answer: c
QN47: The different methods used to protect against foreign exchange risks include:
a. Shifting the risk to third parties
b. Shifting the risk to the other party in an export contract
c. a and b
d. None of the above
Answer
Answer: c
QN48: The two types of marine cargo insurance policies are:
a. Perils-only policy and all-risks policy
b. Perils-only policy and marine-risk policy
c. Marine-risk policy and all-risks policy
d. Marine-risk policy and perils-only policy
Answer
Answer: a
QN49: Which form is required for the completion of such particulars as points of shipment and destination, description of units, and amount of insurance?
a. Customs formb. Air waybill
c. Declarations form
d. Bill of lading
Answer
Answer: c
QN50: Which of the following are typical clauses in cargo insurance contracts?
a. The labels clause
b. Craft and lighter clause
c. Shore clause
d. All of the above
Answer
Answer: d
QN51: Insurance certificates are used because:
a. They are less expensive.
b. Exporters tend to use them frequently.
c. They save time.
d. They are required by government agencies.
Answer
Answer: c
QN52: A particular average loss is:
a. Part of general average loss
b. Loss for goods lost or damaged
c. Not covered by particular charges
d. All of the above
Answer
Answer: c
QN53: In a general average loss:
a. Goods are totally damaged
b. Goods are subject to constructive total loss
c. Goods are sacrificed as part of cargo owner’s contribution for the general loss of others
d. None of the above
Answer
Answer: c
QN54: In most cases, shippers claim from:
a. Carriers
b. Insurers and carriers
c. Insurers
d. All of the above
Answer
Answer: c
QN55: Once an insurance company settles the insured’s claim, it exercises:
a. Residual rights
b. Subrogation rights
c. Indemnity rights
d. Claim rights
Answer
Answer: b
QN56: Mismanagement of export pricing could often lead to:
a. Competitive pressures
b. Development of parallel markets
c. Pressures for price reductions
d. b and c
Answer
Answer: d
QN57: Which of the following policies to pricing and markups apply to both domestic and export markets?
a. High markups are common in industries with relatively large competitors.
b. High markups are common in industries with relatively few competitors.
c. Export prices tend to be relatively high in sectors where increased competition exists.
d. All of the above
Answer
Answer: b
QN58: Which factors help reduce incidences of gray markets?
a. Appropriate packing
b. Appropriate pricing, control systems of quality
c. Appropriate distribution system
d. b and c
Answer
Answer: d
QN59: Which of the following is an external force that influences export pricing?
a. Supply and demand
b. Location and environment of the domestic market
c. Government regulations in the home country
d. All of the above
Answer
Answer: a
QN60: Which definition best describes polycentric pricing?
a. Pricing that is sensitive to foreign conditions
b. Pricing in which a firm strikes an intermediate position
c. Pricing that is sensitive to local conditions
d. Pricing in which a firm strikes a leading position
Answer
Answer: c
QN61: Penetration pricing is based on which of the following?
a. Pricing policy based on charging higher prices for exports in order to stimulate market growth
b. Pricing policy based on charging lower prices for exports in order to stimulate market growth
c. Pricing policy used when businesses have unused capacity or to gain market share
d. Pricing policy used when businesses have used capacity or to gain market share
Answer
Answer: b
QN62: In 1997, Toyota launched a special sales campaign in Tokyo to give away money to some customers of the competitor car it sells in Japan on behalf of General Motors. What type of pricing policy describes Toyota’s actions?
a. Competitive pricing
b. Penetration pricing
c. The marginal approach to pricingd. Demand-based pricing
Answer
Answer: d
QN63: Which of the following organizations in the United States govern terms of sale?
a. Revised American Foreign Trade Definitions and the UCC
b. Revised American Foreign Trade Definitions and the CUC
c. American Trade Association and the UCC
d. American Trade Association and the CUC
Answer
Answer: a
QN64: How often are Incoterms revised to represent contemporary commercial practice?
a. Every 2 years
b. Every 5 years
c. Every 7 years
d. Every 10 years
Answer
Answer: d
QN65: Which of the following is not a Group F term?
a. FCA
b. FAS
c. FSA
d. FOB
Answer
Answer: c
QN66: Which of the following describes Group D terms?
a. The seller’s delivery obligation extends to the country of destination.
b. At the point of delivery, transfer of risk is from the seller to the buyer.
c. The seller is expected to bear the risk and expense of the delivery to a nominated carrier.
d. All of the above
Answer
Answer: a
QN67: Under which term does the buyer or agent have to collect the goods at the seller’s warehouse or store?
a. Ex warehouse
b. Ex store
c. Ex works
d. All of the above
Answer
Answer: d
QN68: In the Group E terms:
a. Risk is not transferred to the seller if damage or loss is attributed to the failure of delivery
b. Risk is not transferred to the buyer if damage or loss is attributed to the failure of delivery
c. The seller bears all risks and charges pertaining to preshipment inspection, export/import licenses, and customs duties needed for exportation
d. All of the above
Answer
Answer: b
QN69: Under Free Carrier, the buyer has which of the following obligations?
a. Contract at his or her own expense for carriage of goods from the named place of delivery
b. Pay the costs of any preshipment inspection except when such inspection is mandated by the exporting country
c. Obtain an import license and other official documents at his or her own riskd. All of the above
Answer
Answer: d
QN70: The central feature of contracts is the notion that the seller undertakes to place the goods on board the ship designated by the buyer.
a. FAS
b. CIS
c. FOB
d. CIP
Answer
Answer: c
QN71: The contract places on the the obligation to arrange for shipment of the goods.
a. FOB; seller
b. CIF; seller
c. FOB; buyer
d. CIF; buyer
Answer
Answer: b
QN72: The CPT term is similar to the CIP term, except that:
a. The seller is not required to arrange or pay for insurance coverage of goods during transportation.
b. The seller is required to arrange or pay for insurance coverage of goods during transportation.
c. The buyer is not required to arrange or pay for the insurance coverage of goods during transportation.
d. The buyer is required to arrange or pay for the insurance coverage of goods during transportation.
Answer
Answer: a
QN73: Which Incoterm is commonly used among large buyers such as wholesalers and department stores in order to ensure just-in-time deliveries?
a. CFR and Ex works
b. CFR and FCA
c. Ex works and FCA
d. a and b
Answer
Answer: c
QN74: Which of the following defines a seller’s obligations under DAF?
a. To contract his or her own expense for the carriage of goods to the named point at the place of delivery
b. To place the goods at the disposal of the buyer on the arriving means of transport when unloaded at the named place of delivery
c. To provide the seller (at the buyer’s expense) with the necessary documents to enable the latter to take delivery of goods
d. All of the above
Answer
Answer: a
QN75: The major differences between arrival contracts and a CIF contract are:
a. In arrival contracts, delivery is effected upon loading the goods on board the vessel at the port of departure; in the CIF contract, delivery is effected when the goods are placed at the disposal of the buyer.b. In arrival contracts, delivery is effected when the goods are placed at the disposal of the buyer; in the CIF contract, delivery is effected upon loading the goods on board the vessel at the port of departure.
c. In arrival contracts, the seller is under no obligation to pay the transport charges if the goods are lost in transit; in the CIF contract, the seller is required to pay against documents.
d. None of the above
Answer
Answer: b
QN76: Under FAS, FOB, CFR, CIF, DES, and DEQ, who is responsible for trade documentation and customs clearance?
a. Buyer
b. Seller
c. a and b
d. None of the above
Answer
Answer: b
QN77: In FAS, FOB terms, which party is responsible for import charges and local cartage/domestic on carriage?
a. Buyer
b. Seller
c. a and b
d. None of the above
Answer
Answer: a
QN78: A buyer’s receipt is required in:
a. DES
b. Ex Works
c. FAS
d. CIF
Answer
Answer: a
QN79: Export charges and domestic precarriage are obtained by which of the following?
a. Distributor
b. Seller
c. Buyer
d. Marketer
Answer
Answer: b
QN80: The responsibility of the transshipment at terminal under falls on the ; and under falls on the .
a. FOB; buyer; CIF; seller
b. FOB; seller; CIF; buyer
c. FAS; seller; CIF; buyer
d. FAS; buyer; CIF; buyer
Answer
Answer: a
QN81: Which of the following is a motive behind the move toward the harmonization of international contract law?
a. Increase in trade and other economic relations between nations
b. The growth of international customary law
c. The adoption of international conventions and rules
d. All of the above
Answer
Answer: d
QN82: Which of the following is not a salient feature of the CISG, which has important implications for import/export managers?
a. Oral contracts/statements
b. Parole evidence
c. Battle of forms
d. Exemption of remedy deficiencies
Answer
Answer: d
QN83: Which organization deals with the issue of performance and bank guarantees supporting obligations arising in international contracts?
a. International Chamber of Commerce
b. Uniform Rules for Contracts Guarantees
c. International Commerce Commission
d. The Ex-Im Bank
Answer
Answer: b
QN84: What types of contracts are used in specific types of international commercial transactions such as trade in commodities or capital goods?
a. Commercial contracts
b. Transactional contracts
c. Standard contracts
d. International standard contracts
Answer
Answer: c
QN85: The CISG Convention claims that in accordance with the perfect tender rule:
a. A buyer may not reject the goods or cancel the contract unless the conformity constitutes a fundamental breach of contract.
b. A buyer may not reject the goods or cancel the contract unless the nonconformity constitutes a fundamental breach of contract.
c. A seller may not reject the goods or cancel the contract unless the conformity constitutes a fundamental breach of contract.
d. A seller may not reject the goods or cancel the contract unless the nonconformity constitutes a fundamental breach of contract.
Answer
Answer: b
QN86: According to the UCC, the provisions of a written contract cannot be modified by a prior or contemporaneous oral agreement according to the:
a. Enforceability of oral contracts
b. Perfect tender rule
c. Specification of oral/written contract
d. None of the above
Answer
Answer: d (the provisions cannot be modified according to the oral testimony)
QN87: An contract is an agreement between a seller and an overseas customer for the performance, financing, and other aspects of an transaction.
a. Export; export
b. Export; import
c. Import; import
d. Import; export
Answer
Answer: a
QN88: In the case of Chicago Prime Packers v. Northern Trading Co., the document used to describe the contents and condition of packages was:
a. Air waybill
b. Certificate of origin
c. Bill of Lading
d. Certificate of Export Labels
Answer
Answer: c
QN89: “300 million Colombian pesos at the exchange rate of $1 = 1,000 pesos. The customer will compensate the exporter for any devaluation in the peso from the rate designated in the contract.” Select the contract provision(s) that relates to this example.
a. Shift of risk to the overseas customer and bank
b. Shift of risk to the overseas bank
c. Payment in importer’s currency
d. Payment in exporter’s currency
Answer
Answer: a
QN90: In many contracts, a clause is in force in the case of excusable delays in performance by the exporter.
a. Price escalation
b. Delivery escalation
c. Foreign currency
d. None of the above
Answer
Answer: a
QN91: Which of the following describes a method of protection against fluctuations in the importer’s currency?
a. The addition of risk premium on the price at the time of the contract
b. The reduction of risk premium on the price at the time of the contract
c. Establishment of a risk account in the importer’s country
d. Establishment of a risk account in the exporter’s country
Answer
Answer: a
QN92: The force majeure clause covers certain specified events, including the inability of the exporter to obtain the necessary ?
a. Labor
b. Price
c. Insurance
d. All of the above
Answer
Answer: a
QN93: The CISG and UCC are similar in areas pertaining to:
a. Perfect tender rule
b. Oral testimony
c. Specification of price
d. None of the above
Answer
Answer: d
QN94: The CISG and UCC differ in areas pertaining to:
a. Additional terms
b. Revocability of an offer
c. Perfect tender rule
d. All of the above
Answer
Answer: d
QN95: Which of the following is not an approach to limit risk exposure?
a. Stipulate the kinds of damages which may be suffered by the buyer for which the seller is not responsible
b. Limit the liability in exports machinery and equipment to a specified amount
c. Vaguely mention in the contract the performance standards that are to be met, but specifically provide warranties to those that need to be objectively tested
d. None of the above
Answer
Answer: c
QN96: Which organizations are prohibited from entering into major contracts without some form of bank guarantee or bond?
a. Private agencies
b. Public agencies
c. Federal governments
d. Local governments
Answer
Answer: b
QN97: Bid guarantees or bonds are often provided from all bidders to provide security to the overseas customer at what stage of the contract?
a. First
b. Second
c. Third
d. Fourth
Answer
Answer: a
QN98: In case of a bank guarantee, what document is issued by a bank, under which payment is made to the importer on demand upon failure of the exporter to perform its obligations under the export contract?
a. Letter of credit
b. Standby letter of credit
c. Letter of issuance
d. Standby letter of issuance
Answer
Answer: b
QN99: A bank guarantee and a bond are similar in that:
a. Both instruments are a form of security provided by a third party to the importer against the exporter’s default.
b. Both instruments are a form of security provided by a third party to the importer against the importer’s default.
c. Both instruments are employed only if importer has a good credit standing
d. All of the above
Answer
Answer: a
QN100: The fundamental principle of international contract law is of contract.
a. Freedom
b. Nature
c. Governance
d. Subject matter
Answer
Answer: a
