Chapter 14

Many medium-sized and small firms are not proactive in seeking export opportunities because:

they are intimidated by the complexities and mechanics of exporting to foreign countries.

When a time draft is drawn on and accepted by a bank, it is known as a _____.

banker's acceptance

The _____ refers to a nationwide group of international trade attorneys who provide free initial consultations to small businesses on export-related matters.

Export Legal Assistance Network

_____, a type of countertrade, occurs when a firm agrees to purchase a certain amount of materials back from a country to which a sale is made.

Counterpurchase

Which of the following is a drawback of relying on an export management company (EMC)?

The exporting company can fail to develop its own exporting capabilities.

Organizations resort to countertrade of goods and services when:

the goods and services cannot be traded for money.

Exporting is nearly always a way to increase the revenue and profit base of a company because:

the international market is much larger than the domestic market.

The lack of a letter of credit exposes the exporter to the risk that the foreign importer will default on payment. The exporter can insure against this possibility by:

buying export credit insurance.

A(n) _____ occurs when a firm builds a plant in a country and agrees to take a certain percentage of the plant's output as partial payment for the contract.

buyback

A range of barterlike agreements by which goods and services are traded for other goods and services when they cannot be traded for money is known as _____.

countertrade

Which of the following drafts allows for a delay in payment?

time draft

A drawback of countertrade is that:

it may involve the exchange of poor-quality goods that cannot be disposed of profitably.

A _____ is issued by a bank, and it indicates that the bank will make payments under specific circumstances.

letter of credit

Firms that do not export often:

lose out on significant opportunities for cost reduction.

The two categories of drafts (or bills of exchange) are:

sight drafts and time drafts.

Which of the following drafts is payable on presentation to the drawee?

slight draft

Countertrade is most likely to be used when:

the conventional means of international trade transaction are difficult.