Ch020.docVIP

Eun Resnick 4e CHAPTER 20 International Trade Finance A Typical Foreign Trade Transaction Forfaiting International Finance in Practice: First Islamic Forfaiting Fund Set Up Government Assistance in Exporting The Export-Import Bank and Affiliated Organizations Countertrade Forms of Countertrade International Finance in Practice: Armed Forces Tops in Countertrade List Some Generalizations about Countertrade Summary MINI CASE: American Machine Tools, Inc. International trade is more difficult and risky from the exporter’s perspective than is domestic trade because: the exporter may not be familiar with the buyer, and thus not know if the importer is a good credit risk if the merchandise is exported abroad and the buyer does not pay, it may prove difficult, if not impossible, for the exporter to have any legal recourse political instability makes it risky to ship merchandise abroad certain to parts of the world all of the above Answer: d) A Typical Foreign Trade Transaction The three basic documents needed in a foreign trade transaction are: letter of credit, time draft, and proof of inspection letter of credit, time draft, and a bill of lading letter of credit, bill of lading, and insurance time draft, bill of lading, and a pro forma statement Answer: b) The primary methods of payment for foreign trades, ranked in the order of most secure to least secure for the exporter is: open account, consignment, letter of credit/time draft, and cash in advance consignment, letter of credit/time draft, cash in advance, and open account cash in advance, letter of credit/ time draft, consignment, and open account cash in advance, letter of credit/ time draft, open account, and consignment Answer: c) A bill of lading Is a document issued by the common carrier specifying that it has received the foods for shipment; it can serve as title to the goods. Later becomes a banker’s acceptance. Is a time draft that calls for payment upon physical delivery of goods. None of the