QN1: In cases where no express or implied choice of law exists, it may be the role of the to decide what law should govern their contract.
a. Attorneys
b. Parties
c. Courts
d. None of the above
Answer
Answer: c
QN2: Commercial custom and usage have often been used in the drafting and interpretation of what type of law?
a. Commercial
b. Customary
c. International
d. Mercantile
Answer
Answer: a
QN3: According to the , CISG permits the seller to remedy the delivery of defective goods after the time of performance has expired unless such delivery would cause the buyer “unreasonable inconvenience.”
a. Battle of the forms
b. Duty to inspect and proper notice
c. Right to remedy deficiencies
d. Exemptions from liability
Answer
Answer: c
QN4: Standard contracts forms are often used in certain types of international commercial transactions such as or .
a. Trade in commodities; capital goods
b. Trade in commodities; capital services
c. Capital goods; capital services
d. None of the above
Answer
Answer: a
QN5: In the case of the “Acceptance of Standard International Contracts,” the Indonesian firm contracted to buy from a seller in England 40,000 metric tons of what product?
a. White rice
b. White sugar
c. Brown rice
d. Brown sugar
Answer
Answer: b
QN6: Which document is a contract of carriage between the shipper and the carrier, and is issued when the consignment is made directly to the overseas customer?
a. Bill of lading
b. Bill of exchange
c. Air waybill
d. None of the above
Answer
Answer: a
QN7: A(n) is issued by the air carrier and serves as a receipt for the shipper.
a. Consular invoice
b. Inspection certificate
c. Insurance certificate
d. Air waybill
Answer
Answer: d
QN8: A(n) bill of lading is issued by the railway carrier or trucking firm certifying carriage of goods from the place where the exporter is located to the point of exit for shipment overseas.
a. Inland
b. Through
c. Claused
d. Clean
Answer
Answer: a
QN9: Which type of bill of lading is used for intermodal transportation?
a. Inland
b. Clean
c. Clause
d. Through
Answer
Answer: d
QN10: Certain nations require a for customs, statistical, and other purposes, and it must be obtained from the of the country to which the goods are being shipped and usually must be prepared in the of that country.
a. Consular invoice; consulate; language
b. Consular invoice; government; language
c. Certificate of origin; consulate; language
d. Certificate of origin; government; language
Answer
Answer: a
QN11: Inspection certificates are generally requested for certain commodities:
a. With grade designations
b. Machinery
c. Equipment
d. All of the above
Answer
Answer: d
QN12: Which of the following is not a requirement that should be included in the basic information of a commercial invoice?a. Description of goods
b. Description of payment terms
c. Order date
d. Received shipment date
Answer
Answer: d
QN13: What type of a receipt is used to transfer accountability when the export item is moved by the domestic carrier to the port of embarkation and left with the international carrier for export?
a. Commercial receipt
b. Dock receipt
c. Country of origin receipt
d. Destination export receipt
Answer
Answer: b
QN14: A SED form is issued to control certain exports and compile trade data, and is required for shipments valued at more than what amount?
a. $300
b. $500
c. $700
d. $1,000
Answer
Answer: b
QN15: Even though air carriers are more expensive, their cost may be offset by reductions in , , and .
a. Packing; documentation; mode of transportation
b. Packing; documentation; exemption of import duties
c. Packing; documentation; inventory requirements
d. None of the above
Answer
Answer: c
QN16: is the least utilized mode of transportation for cargo and accounts for less than percent of total international freight movement.
a. Air freight; one
b. Rail freight; three
c. Trucking; five
d. Ocean freight; ten
Answer
Answer: a
QN17: What types of changes over the past two decades have significantly altered the size and design of aircraft to handle heavy cargo?
a. Industrial changes
b. Manufacturing changes
c. Technological changes
d. Transportation changes
Answer
Answer: c
QN18: Which of the following is an advantage of air transportation?
a. Generally expensive for high bulk freight
b. Shipping containers are often small enough to fit into the air carrier
c. Standard domestic packing is sufficient
d. It is suitable for products that are sensitive to low pressures and variations in temperatures
Answer
Answer: c
QN19: Which of the following is an example of an air carrier that provides integrated services?
a. Super Sonic Air Service
b. DHL Sonic Air Service
c. UNACT Air Service
d. None of the above
Answer
Answer: d (UPS Sonic Air Service is an example)
QN20: The role of a is similar to that of a nonvessel operating in ocean freight.
a. Forwarder; exporter
b. Forwarder; carrier
c. Consolidator; exporter
d. Consolidator; carrier
Answer
Answer: b
QN21: Which organization is the forum in which fares and rates are negotiated among member airlines?
a. IATA
b. AITA
c. TAIA
d. AAIT
Answer
Answer: a
QN22: International transportation of goods by air is governed by:
a. Warsaw Convention of 1936
b. Amended Convention of 1929
c. Warsaw Convention of 1935
d. None of the above
Answer
Answer: d (they are governed by the Warsaw Convention of 1929 and Amended Convention of 1955)
QN23: What is another name for an air waybill?
a. Air consignment note
b. Air consignee note
c. Air carrier’s note
d. Air entitlement’s note
Answer
Answer: a
QN24: The time to give a written notice of loss or damage by consignee has been extended from 7 days to days under the amended Warsaw Convention (1955).
a. 10
b. 12
c. 14
d. 16
Answer
Answer: c
QN25: Which of the following are also known as tramps?
a. Chartered or leased vessels
b. Chartered or leased fleets
c. Chartered or leased cargos
d. Chartered or leased rail
Answer
Answer: a
QN26: What is the purpose of a shipping conference?
a. The self-regulation of price competition through uniform rates
b. The self-regulation of price competition through predatory price rates
c. The government regulation of price competition through uniform rates
d. The government regulation of price competition through predatory price rates
Answer
Answer: a
QN27: A carrier transporting goods under a B/L is required to exercise “due diligence” in:
a. Making the rail land worthy
b. Making the ship safe and fit for their reception, carriage, and preservation of goods
c. Loading and handling of goods with care
d. All of the above
Answer
Answer: b
QN28: In order to ensure the application of liability limits to their agents and employees, carriers add which clause to their bill of lading?
a. Hague Clause
b. Hague-Visby Clause
c. Himalaya Clause
d. Liability Clause
Answer
Answer: c
QN29: To be eligible for an ocean freight forwarder’s license, the applicant must demonstrate to the FMC that:
a. He or she has a minimum of four years experience in ocean freight forwarding duties
b. The individual has obtained and filed a valid surety bond with the MFC
c. He or she has a minimum of three years experience in ocean freight forwarding duties
d. The individual has obtained and filed a valid surety bond with the CFM
Answer
Answer: c
QN30: Which of the following type of transport handles bulk cargo and absorbs loading, unloading, and other charges?
a. Rail
b. Fleet
c. Vessel
d. Trucking
Answer
Answer: a
QN31: quotation is the expression of the number of U.S. dollars required to buy one unit of foreign currency.
a. Direct
b. Indirect
c. Common
d. None of the above
Answer
Answer: a
QN32: Which of the following is not a reason for individual companies or governments to enter into the foreign exchange market as buyers or sellers of foreign currencies?
a. Foreign travel and purchase of foreign bonds and stocks
b. Central banks enter the foreign exchange market and buy only foreign currency to stabilize the national currencies
c. Speculation
d. None of the above
Answer
Answer: b (central banks enter the foreign exchange market and buy and sell foreign currency to stabilize the national currencies)
QN33: Which of the following defines speculation?
a. Sale of foreign currency at a low rate
b. Purchase of foreign currency at a low rate
c. Barter of foreign currency at high rate
d. Purchase of local currency at a high rate
Answer
Answer: b
QN34: In which of the following places can foreign exchange trading take place?
a. Private office
b. Home
c. Banks
d. All of the above
Answer
Answer: d
QN35: Foreign exchange rates are derivatives of the fundamental factors and conditions in the market.
a. Economic; geographical
b. Economic; technical
c. Financial; political
d. Political; technical
Answer
Answer: b
QN36: During the 1970s the continuous deterioration in the U.S. trade deficit was mainly due to which of the following?a. Increased sale of domestic goods to foreign markets
b. Oversupply of dollars in foreign central banks
c. Low supply of dollars in foreign central banks
d. a and c
Answer
Answer: b
QN37: Which of the following is not an important determinant of supply and demand for foreign currencies?
a. Interest rates
b. Growth in money supply
c. Inflation
d. Country’s balance of power
Answer
Answer: d
QN38: Currency traders buy currencies of countries with interest rates in order to their investment returns and sell those currencies with interest rates.
a. Low; minimize; low
b. Low; maximize; low
c. High; maximize; low
d. High; minimize; low
Answer
Answer: c
QN39: Since the end of what year has the dollar lost about half its value against the Euro?
a. 1990
b. 1991
c. 1992
d. 1993
Answer
Answer: c
QN40: The Mexican peso appreciated in 2006 due to:
a. A decrease in the inflow of funds resulting from the rise of international oil prices
b. An increase in the inflow of funds resulting from the rise of international oil prices
c. A decrease in foreign investment
d. All of the above
Answer
Answer: b
QN41: The rupiah has appreciated in value since 2004 due to what reasons?
a. Political stability
b. Economic growth
c. Increase in foreign investment
d. a and b
Answer
Answer: d
QN42: Which of the following is not a type of transaction that contributes to foreign exchange risks in international trade?
a. Purchase of goods and services whose prices are stated in local currencies
b. Purchase of goods and services whose prices are stated in foreign currencies
c. Sale of goods and services whose prices are stated in local currencies
d. Debt payments are accepted only in local currencies
Answer
Answer: b
QN43: Which of the following countries do not impose restrictions on the use of foreign exchange markets?
a. France
b. China
c. Japan
d. a and c
Answer
Answer: d
QN44: Which of the following is the most extreme form of exchange restrictions?
a. The limitation of the availability of foreign currency to purchase imports
b. The limitation of the availability of domestic currency to purchase imports
c. The promotion of investment
d. The discharge of debt payments
Answer
Answer: a
QN45: To the extent that an exporter’s inputs are domestic, a strong domestic currency could lead to of domestic and foreign markets.
a. Loss
b. Gain
c. Weakness
d. Strength
Answer
Answer: a
QN46: Who faces a loss of domestic markets due to the rise in the price of imports if the domestic currency weakens?
a. Exporters
b. Importers
c. Both exporters and importers
d. None of the above
Answer
Answer: b
QN47: What allows firms to reduce the adverse impact of foreign currency fluctuations?
a. Spot prices
b. Hedging
c. Exchange rates
d. Premiums
Answer
Answer: b
QN48: The difference between hedging in the spot markets and forward markets is that:
a. Forward market hedging does not require borrowing or tying up a certain amount of money for a period of time.
b. Spot market hedging does not require borrowing or tying up a certain amount of money for a period of time.
c. Forward market hedging allows for a three day period, since the forward rates are quoted on a monthly basis.
d. a and c
Answer
Answer: a
QN49: What are used to move out of one currency into another for a limited period of time without the exchange risk of an open position?
a. Swaps
b. Hedges
c. Forwards
d. All of the above
Answer
Answer: a
QN50: If currency changes are likely to result in a 10 percent loss, the price change could be increased by what percentage?
a. 10
b. 20
c. 30
d. 100
Answer
Answer: a
QN51: In what year did the Euro become the legal currency of the members of the EU?
a. 1996
b. 1997
c. 1998
d. None of the above
Answer
Answer: d (in 1999)
QN52: Which of the following is not a benefit of the Euro?
a. The Euro will reduce the cost of foreign exchange with regard to all intra-European transactions
b. European businesses will incur low inflation rates and higher interest rates
c. Elimination of exchange rate uncertainty
d. Member states will achieve rapid economic and financial integration
Answer
Answer: b
QN53: The major costs associated with the Euro pertain to:
a. The inability of members to pursue independent policies
b. The ability of members to pursue unionized policies
c. The inability of members to pursue independent fiscal policies only
d. All of the above
Answer
Answer: a
QN54: An contract protects from losses due to depreciation of the currency.
a. Export; importer; importer’s
b. Export; exporter; importer’s
c. Import; importer; importer’s
d. Import; exporter; importer’s
Answer
Answer: b
QN55: Which of the following is a reason for the existence of the foreign exchange market?
a. Foreign travel
b. Foreign investment
c. Payments in foreign currency
d. All of the above
Answer
Answer: d
QN56: The payment terms offered by exporters to foreign buyers are all of the following except:
a. Cash in advance
b. Consignment but negotiable note
c. Open account
d. Documentary collection
Answer
Answer: b
QN57: The following payment method could be risky for the seller:
a. Cash in advance
b. Irrevocable letter of credit
c. Open account
d. Bank collection time draft
Answer
Answer: c
QN58: Which of the following method is the least costly for a buyer?
a. Cash in advance
b. Negotiable note
c. Open account
d. Bank collection time draft
Answer
Answer: c
QN59: A time draft signed and stamped by a merchant is:
a. Trade acceptance
b. Banker’s acceptance
c. Merchant acceptance
d. Bank collection sight draft
Answer
Answer: a
QN60: An air waybill acts as:
a. Document of title
b. Contract of carriage
c. Shipper’s receipt of goods
d. b and c
Answer
Answer: d
QN61: Letters of credit are used for all of the following except:
a. As an important way of facilitating customs release of goods
b. As a standby to guarantee a perform obligation
c. As a method of financing export/import of goods
d. As a device to guarantee payment obligation
Answer
Answer: a
QN62: The bank in the beneficiary country that guarantees the issuing bank’s commitment to pay the letter of credit is the:
a. Advising bank
b. Correspondent bank
c. Issuing bank
d. Confirming bank
Answer
Answer: d
QN63: Interbank transactions including transfers and foreign exchange confirmations benefit from the use of a network called:
a. EDI
b. FARINE
c. SWIFT
d. MAC, first introduced by the U.S. International Trade Administration (ITA)
Answer
Answer: c
QN64: Letters of credit consist of a contractual relationship between the following:
a. Buyer and its bank
b. Issuing bank and seller
c. Issuing bank and correspondent bank
d. All of the above
Answer
Answer: d
QN65: The international rules governing documentary draft are called:
a. Uniform Customs rules, 1994
b. Uniform Rules for collections, 1995
c. UCP 500, 1993
d. UCC, 2000
Answer
Answer: b
QN66: The buyer or buyer’s bank has no right to stop payment (under a letter of credit transaction) in order to inspect the quality of the goods shipped because of:
a. the rule of strict compliance
b. the independent principle
c. the rule of red clause credit
d. the rule of standby letters of credit
Answer
Answer: b
QN67: The buyer does not receive the documents and thus will not obtain possession of goods until payment is made to the collecting bank in documentary payments. This method is often called:
a. Time draft
b. Date draft
c. Sight draft
d. Acceptance draft
Answer
Answer: c
QN68: In documentary collection, the risk of nonpayment is higher in the case of:
a. Sight draft, documents against payment
b. Sight draft, documents against acceptance
c. Time draft, documents against acceptance
d. None of the above
Answer
Answer: d
QN69: A bank’s guarantee to the beneficiary (buyer) that a specific sum of money will be received by the beneficiary in the event of default or nonperformance by the seller under a sales or service contract is:
a. Credit surety
b. Performance bond
c. Standby letter of credit
d. Retention surety
Answer
Answer: c
QN70: A letter of credit in which the buyer is allowed to reuse the credit after the letter is drawn by the seller and the bank is reimbursed is called:
a. Transferable letter of credit
b. Revolving letter of credit
c. Back-to-back letter of credit
d. None of the above
Answer
Answer: b
QN71: In a letter of credit (L/C), the L/C may be split among many parties, and each party is able to present their own documents for payment.
a. Revocable
b. Red clause
c. Transferable
d. Confirmed
Answer
Answer: c
QN72: A letter of credit contains a typographical error of some significance. An amendment requires approval by:
a. The account party
b. The beneficiary
c. The issuing bank
d. a and c
Answer
Answer: d
QN73: Discrepancies that can be corrected by a written waiver from the buyer are:
a. Accidental discrepancies
b. Adjustable discrepancies
c. Major discrepancies
d. None of the above
Answer
Answer: d
QN74: A promissory note is a payment instrument that includes:
a. The drawer
b. The payee
c. The drawee
d. b and c
Answer
Answer: d
QN75: The exporter is allowed to receive an advance on the letter of credit before presentation of the necessary documents. This type of financing is:
a. Factoring
b. Forfeiting
c. Transferable letter of credit
d. Red clause credit
Answer
Answer: d
QN76: In letters of credit, banks can refuse or accept to pay letters of credit in order to:
a. Serve the interests of the bank
b. Accommodate the needs of its buyer
c. Protect the public interest
d. None of the above
Answer
Answer: d
QN77: Which of the following is a reason to not protest actions in cases when the buyer refuses to pay or honor the sales contract?
a. A limited time is allowed for such actions
b. They can be quite costly
c. They could hinder future business dealings with customer
d. All of the above
Answer
Answer: d
QN78: Irrevocable letters of credit:
a. Can be amended by the seller if the bank agrees
b. Cannot be amended
c. Cannot be canceled before the expiry date without agreement of all parties to the credit
d. Cannot be canceled without the agreement of the confirming and issuing bank
Answer
Answer: c
QN79: A letter of credit that is issued on the strength of another letter of credit is called a:
a. Standby letter of credit
b. Back-to-back letter of credit
c. Acceptance letter of credit
d. Transferable letter of credit
Answer
Answer: b
QN80: This type of credit can potentially result in an unfair and capricious calling in of the credit in spite of the absence of default or nonperformance.
a. Standby letter of credit
b. Acceptance letter of credit
c. Transferable letter of credit
d. Back-to-back letter of credit
Answer
Answer: a
QN81: The origins of countertrade can be traced to ancient times when international trade was based on the free exchange of goods. Barter flourished in Northern Mesopotamia as early as BC, when inhabitants traded in and metals.
a. 2000; spices
b. 3000; textiles
c. 4000; cinnamon
d. 5000; gold
Answer
Answer: b
QN82: The use of countertrade has steadily increased, and is presently estimated to account for about to percent of world trade.
a. 10 to 15
b. 15 to 18
c. 15 to 20
d. 20 to 25
Answer
Answer: c
QN83: Examples of countertrade include which of the following?
a. Indonesia negotiated for a power station project with Asea Brown Boveri and for an air traffic control system with Hughes Aircraft.
b. Counterpurchase obligations were to be 100 percent of the FOB values.
c. Lockheed Martin agreed to sell F-16 military aircraft to Hungary in exchange for large investment and counterpurchase commitments. The firm agreed to buy $250 million (U.S.) worth of Hungarian goods.
d. Taiwan purchased 60 Mirage 2000-5 from a French aviation company, Dussault. In return, Dussault undertook a joint venture with Taiwan’s aerospace company, Chenfeng, for the production of key aircraft parts and components for local aircraft and export.
Answer
Answer: d
QN84: Which of the following is not a benefit of countertrade for buyers?
a. Transfer of technology
b. Alleviating balance of payments difficulties
c. Maintenance of stable prices for imports and exports
d. All of the above are benefits of countertrade
Answer
Answer: c
QN85: Which of the following statements is false?
a. Countertrade generates additional sales that would not otherwise be possible. It also enables entry into difficult markets.
b. Countertrade provides exporters access to a continuous supply of production components, precious raw materials, or other natural resources in return for sales of manufactured goods or technology.
c. Countertrade enables the exporter to adjust the price of a product in exchange for underpriced commodities.
d. All of the above are benefits of countertrade for exporters.
Answer
Answer: c (the price can be adjusted for overpriced commodities)
QN86: Which of the following is not a theory of countertrade?
a. Countertrade is positively correlated with a country’s level of exports.
b. Countertrade is often used as a substitute for foreign direct investment.
c. The stricter the level of exchange controls, the lower the level of countertrade activity.
d. Countertrade is positively correlated with a country’s level of indebtedness.
Answer
Answer: c (the stricter the level of exchange controls, the higher the level of countertrade activity)
QN87: If the transaction involves the use of money, it is considered:
a. Counterpurchase
b. Offset
c. Buyback
d. All of the above
Answer
Answer: d
QN88: According to Figure 12.1, what occurs when third parties are involved in countertrade?
a. Switch trading
b. Clearing arrangements
c. Simple barter
d. Counterpurchase
Answer
Answer: a
QN89: What type of an arrangement allows two governments to agree to purchase a certain volume of each other’s goods and/or services over a certain period of time, usually a year?
a. Parallel
b. Clearing
c. Simple
d. Compensation
Answer
Answer: b
QN90: In which type of transaction can a private firm sell or license technology or build a plant
(with payment in hard currency) and agree to purchase, over a given number of years, a certain proportion of the output produced from the use of the technology or plant?
a. Simple
b. Compensation agreement (buyback)
c. Clearing
d. a and b
Answer
Answer: b
QN91: Identify the transaction that best fits these examples: A Japanese company exports computer chip processing and design technology to Korea, Singapore, and Taiwan, with a promise to purchase a certain percentage of the output over a given period of time. Levi Strauss transfers its know-how and trademark to a Hungarian firm for the production and sale of its products, with an agreement to purchase and market the output in Western Europe.
a. Buyback
b. Clearing
c. Simple
d. Compensation
Answer
Answer: a
QN92: In , a firm sells goods and/or services to an importer, promising to purchase from the importer or other entities in the importing nation goods that are unrelated to the items sold.
a. Switch trade
b. Counterbuyback
c. Counterpurchase
d. Compensation
Answer
Answer: c
QN93: In general, what is the duration of a counterpurchase?
a. 2 to 3 years
b. 3 to 4 years
c. 3 to 5 years
d. 5 to 8 years
Answer
Answer: c
QN94: This is an overseas production arrangement, usually based on a government-to-government agreement that permits a foreign government or producer to acquire the technical information to manufacture all or part of an equipment or component originating in the exporting country. It may include a government-to-government production under license.
a. Subcontractor production
b. Coproduction
c. Investment production
d. Technology transfer production
Answer
Answer: b
QN95: Identify the type of direct offset that best describes this example: In 1996, Italy announced plans to purchase four U212 submarines from Germany. The industrial cooperation agreement will give Italian companies substantial work in building the submarines and their systems. Indirect offsets (arrangements involving goods and services unrelated to the exports) will also be utilized as compensation for the predominance of German-supplied subsystems and components.
a. Subcontractor production
b. Coproduction
c. Investment production
d. Technology transfer production
Answer
Answer: a
QN96: offsets are contractual arrangements in which goods and services unrelated to the exports are acquired from or produced in the host (purchasing) country. These include, but are not limited to, certain forms of foreign investment, technology transfer, and countertrade.
a. Direct
b. Indirect
c. Bilateral
d. Unilateral
Answer
Answer: b
QN97: Private countertrade transactions, however, fall outside the purview of the , which regulates only governmental actions.
a. World Bank
b. IMF
c. GATT/WTO
d. NAFTA
Answer
Answer: c
QN98: The U.S. policy on countertrade was developed in 1983 by an interagency working group. The policy includes which of the following?
a. It prohibits federal agencies from promoting countertrade in their business or official contracts.
b. It adopts a hands-off approach toward those arrangements that do not involve the U.S. government or are pursued by private parties.
c. It provides no special accommodations for cases involving such transactions. The Export-Import Bank (Ex-Im Bank) will not provide financing support for the countertrade component of a transaction or accept countertrade as security, but the U.S. export component is eligible for all types of Ex-Im Bank support.
d. All of the above
Answer
Answer: d
QN99: In view of congressional concern with respect to such practices, the Trade Act mandated the establishment of an office of barter within the Department of Commerce’s International Trade Administration and of an interagency group on countertrade.
a. 1992
b. 1995
c. 1998
d. 1999
Answer
Answer: c
QN100: Buybacks, counterpurchase, or offsets require the use of one or separate contracts. Its key provisions include which of the following?
a. The compensation ratio
b. Range of products to be countertraded
c. Assignment clause
d. All of the above
Answer
Answer: d
