QN1: In asset-based financing, banks and other commercial lenders provide loans secured by nonfixed assets.
Answer
Answer: False. They are secured by fixed assets.
QN2: SICBs are private companies funded by the SBA that are established to provide loan (sometimes equity) capital to small businesses.
Answer
Answer: False. SBICs are these companies.
QN3: Commercial finance companies grant short-term loans using accounts receivable, inventories, or equipment as collateral. They can also factor (buy) accounts receivable at a discount and provide the export-import firm the necessary capital for growth and expansion.
Answer
Answer: True.
QN4: Under consignment sales, an exporter will transfer possession or ownership of the merchandise on a deferred-payment basis (payment deferred for an agreed period of time).
Answer
Answer: False. This occurs under an open account, not under consignment sales.
QN5: Factoring is a continuous arrangement between a factoring concern and the exporter, whereby the factor purchases export receivables for a somewhat discounted price.
Answer
Answer: True.
QN6: Factoring is not available for shipments with a value of less than $500,000. It is appropriate for continuous or repetitive transactions (not a one-shot deal). Factors often require access to a certain volume of the exporter’s yearly sales.
Answer
Answer: False. Factoring is unavailable for values less than $100,000.
QN7: Forms of external financing includes debt or equity financing, short-term/intermediate/longterm financing, and investment, inventory, or working capital financing.
Answer
Answer: True.
QN8: A long-term financing method includes trade/banker’s acceptance: A draft accepted by the importer is used as collateral to obtain financing.
Answer
Answer: False. A short-term financing method includes this acceptance.
QN9: Financing by the importer includes advance or progress payments.
Answer
Answer: True.
QN10: Exporters prefer to be paid on or before shipment of the goods, whereas buyers want to delay payment until they have sold the merchandise.
Answer
Answer: True.
QN11: A guideline of the OECD on export credits for its members includes a minimum repayment term of ten and a half years, with exceptions for poor countries.
Answer
Answer: False. It includes a maximum repayment term of eight and a half years.
QN12: A function of the Ex-Im Bank includes negotiation with other countries to reduce the level of subsidy in export credits.
Answer
Answer: True.
QN13: For small business exporters, the Small Business Administration (SBA) can guarantee a working capital loan up to $1.5 million or up to $3.0 million under a co-guaranty agreement with the Ex-Im Bank.
Answer
Answer: False. The SBA can guarantee working capital loans up to $1.1 million or $2.0 million under a co-guaranty.
QN14: Exporters can borrow up to 75 percent of their inventory, including work-in-process and up to 90 percent of their foreign account receivable, thus increasing their borrowing capacity.
Answer
Answer: True.
QN15: Ex-Im Bank offers a long-term insurance policy (Small Business Insurance Policy) that is intended to meet the credit requirements of small, more experienced exporters.
Answer
Answer: False. This is a short-term insurance policy for less experienced exporters.
QN16: Under the direct loan program, Ex-Im Bank provides a fixed-rate loan directly to creditworthy foreign buyers for the purchase of U.S. capital equipment, projects, and related services. The loan covers up to 85 percent of the U.S. export value.
Answer
Answer: True.
QN17: The ECPW is a combined effort of the SBA and Ex-Im Bank to provide short-term working capital to U.S. exporters.
Answer
Answer: False. The EWCP is the combination.
QN18: OPIC offers many programs to insure investments in developing nations against political risk, including currency inconvertibility, expropriation, and political violence.
Answer
Answer: True.
QN19: The GSM-103 program provides credit guarantees for up to three years and will cover 98 percent of the export value and up to 2.8 percentage points of interest on the guaranteed value.
Answer
Answer: False. The GSM-102 program provides this.
QN20: The first U.S. export control was introduced in 1775 when the Continental Congress outlawed the export of goods to Great Britain.
Answer
Answer: True.
QN21: The Equal Export Opportunity Act of 1932 curtailed the use of export controls if the product (that is subject to such restrictions) was available from sources outside the United States in comparable quality and quantity.
Answer
Answer: False. The Equal Export Opportunity Act of 1972 did this.
QN22: The Bureau of Industry and Security (BIS) is the primary licensing agency for dual use exports.
Answer
Answer: True.
QN23: AES is a system that allows electronic submission of license applications through private vendors.
Answer
Answer: False. ELAIN allows this.
QN24: The NSG was established in 1992 by a group of nuclear supplier countries (44 member countries). It seeks to contribute to the nonproliferation of nuclear weapons through the implementation of guidelines for nuclear and nuclear-related exports.
Answer
Answer: True.
QN25: The Export Administration Act was primarily aimed at the Arab boycott against Israel, however it also prevents U.S. firms from being used to implement foreign policies of other nations that are inconsistent or contrary to U.S. policy.
Answer
Answer: True.
QN26: The EAR applies only to U.S.–based companies, not including individuals in the United States.
Answer
Answer: False. EAR applies to individuals in the United States.
QN27: The Foreign Corrupt Practices Act (FCPA) of 1979 was enacted as a public response to the Watergate Scandal and the disclosure of corrupt payments by U.S. multinationals to foreign government officials in order to obtain business.
Answer
Answer: False. The FCPA of 1977 did this.
QN28: According to International Perspective 15.6, the country with the lowest level of corruption was Canada.
Answer
Answer: True.
QN29: Interest-charge DISCs: Under this arrangement, taxes on export sales can be deferred. However, shareholders must pay interest on their proportionate share of the accumulated taxes deferred.
Answer
Answer: True.
QN30: All goods imported into the United States are subject to duty or duty-free entry, depending on their classification under the applicable tariff schedule and their country of origin.
Answer
Answer: True.
QN31: Prohibited imports include certain drug paraphernalia, products sold in violation of intellectual property rights, and all types of narcotics.
Answer
Answer: False. Only certain narcotics are prohibited, not all types.
QN32: The Buy-America Act of 1933 provides the purchase of goods by all foreign governments from domestic sources unless they are not of satisfactory quality, are too expensive, or are not available in sufficient quantity.
Answer
Answer: False. The Buy-America Act of 1933 provides the purchase of goods by the U.S. government from domestic sources.
QN33: The U.S./Israel Free Trade Agreement provides for free or low rates of duty only for merchandise imports from Israel insofar as the imports meet the rules of origin requirements.
Answer
Answer: True.
QN34: The GSP is a special arrangement by developed nations, agreed on by the UN to provide special treatment for imports from developing countries to encourage their economic growth.
Answer
Answer: True.
QN35: The AOGA was created to offer beneficiary countries from sub-Saharan Africa duty-free treatment on more than 1,800 items that are exported to the United States.
Answer
Answer: False. The AGOA does this.
QN36: A license is required to transact customs business by the exporter only on his or her own account.
Answer
Answer: False. A license is not required to transact customs business by the exporter or importer on his or her own account.
QN37: Ad-valorem is a duty-based tax on the value of the imported product, whereas a specific duty is based on quantity or volume.
Answer
Answer: True.
QN38: Trade intermediaries and services include customs brokers, free-trade zones, and bonded warehouses.
Answer
Answer: True.
QN39: Bonded warehouses are secured, nongovernmental-approved warehouse facilities in which exported goods are stored or manipulated with payment of duty until they are removed and entered for consumption.
Answer
Answer: False. Bonded warehouses are secured, government-approved warehouse facilities in which imported goods are stored or manipulated without payment of duty until they are removed and entered for consumption.
QN40: Products are considered unique when they are imported from other countries.
Answer
Answer: True.
