Question 1

All of the following are elements of total cost for worldwide sourcing except _____.

Accepted Answer

Domestic corporate sales, general, and administrative expenses are not directly related to the cost of worldwide sourcing and thus, are not elements of total cost for worldwide sourcing. The other options (packaging, base price, inventory carrying cost, and insurance premiums) all contribute to the total cost of worldwide sourcing.

Question 2

_____ agreements require the seller to purchase some agreed-uponpercentage of goods from a country over a specified period but allow a company to fulfill its countertrade requirement with any company or industry in the country.

Accepted Answer

Offset agreements require the seller to purchase some agreed-upon percentage of goods from a country over a specified period but allow a company to fulfill its countertrade requirement with any company or industry in the country. In this type of agreement, the buyer is not limited to buying only from the seller or participating in a specific industry. Hence, offset agreement is the best choice that fits the given description. Compensation trading, switch trading, buy-back, and barter are other forms of countertrade that have different features and requirements.

Question 3

_____ requires a selling firm to purchase a specified amount of goods from the country that purchased its products.

Accepted Answer

Counterpurchase is a type of international trade in which a selling firm agrees to purchase a specified amount of goods from the country that purchased its products. This is also known as "reciprocity trading" or "parallel trading."

Question 4

A FTZ _____ is typically housed in a port or an industrial park and is available to multiple companies.

Accepted Answer

A general-purpose zone is typically housed in a port or an industrial park and is available to multiple companies, unlike a subzone which is designated for a specific company's use.

Question 5

_____ is a broad term that refers to all international and domestic trade where buyer and seller have at least a partial exchange of goods for goods.

Accepted Answer

Countertrade is the term that refers to all international and domestic trade where buyer and seller have at least a partial exchange of goods for goods. It involves the barter system or other creative forms of exchange where conventional currency payments are not used.

Question 6

All of the following are typical reasons why a country imposes countertrade demands except _____.

Accepted Answer

The reason why a country imposes countertrade demands is to solve their financial problems, expand their market access and help their domestic industry. However, the reason that a country may need assistance to produce its own goods and services does not explain why they impose countertrade demands.

Question 7

A/An _____ can be changed or canceled at any time by the buyer without the seller's consent.

Accepted Answer

A revocable letter of credit can be changed or canceled at any time by the buyer without the seller's consent. An irrevocable letter of credit cannot be changed or canceled without the consent of both parties. Incoterms are standardized international trade terms that define the responsibilities of the buyer and seller. CISG is a set of rules governing international sales contracts, and switch trade refers to the practice of selling and repurchasing securities with the goal of realizing a profit.

Question 8

_____ mean(s) that no duties or quota charges will be placed on goods that are reexported from the FTZ.

Accepted Answer

Duty exemption means that no duties or quota charges will be placed on goods that are reexported from the FTZ.

Question 9

A/An _____ is a secure location approved by the appropriate U.S. Customs and Border Protection (CBP) office.

Accepted Answer

A foreign trade zone is a secure area approved by CBP where foreign and domestic merchandise may be admitted without being subject to formal customs entry procedures or payment of duties until the merchandise enters US commerce.

Question 10

_____ is a process that involves the straight exchange of goods for goods with no exchange of currency.

Accepted Answer

Barter is the only process mentioned that involves the direct exchange of goods without involving currency. Counterpurchase and buy-back involve the exchange of goods for currency, while offset and switch trading involve more complex transactions that may involve currency or other forms of compensation.

Question 11

All of the following are elements of total cost for worldwide sourcing except _____.

Accepted Answer

New product advertising is not related to total cost for worldwide sourcing as it is a separate cost that is not directly related to the sourcing process. The other options, such as payment and currency fees, port terminal and handling fees, communication costs, and base price, are all directly related to the total cost of worldwide sourcing.

Question 12

The _____ was passed by Congress in 1977 to prevent companies from making questionable or illegal payments to foreign government officials, politicians, and political parties.

Accepted Answer

The Foreign Corrupt Practices Act (FCPA) was passed by Congress in 1977 to prevent companies from making questionable or illegal payments to foreign government officials, politicians, and political parties. This act makes it illegal to offer, promise, or provide anything of value to foreign officials as a way to obtain or retain business. The FCPA also requires companies to keep accurate and detailed records of all transactions in order to ensure compliance.

Question 13

A/An _____ can only be changed or canceled upon agreement of all parties.

Accepted Answer

An irrevocable letter of credit is a financial tool used in international trade that guarantees payment to the seller by the buyer's bank. It cannot be changed or canceled without the agreement of all parties involved. Therefore, an irrevocable letter of credit is the best choice for this question.

Question 14

A/An _____ is issued by the purchaser's bank in conjunction with an affiliate bank in the seller's country which assures the seller that the funds are in the bank.

Accepted Answer

A letter of credit is a financial document that is issued by the purchaser's bank in conjunction with an affiliate bank in the seller's country. It guarantees payment to the seller as long as the seller fulfills the terms of the agreement. This provides security to both the buyer and the seller in international trade transactions.

Question 15

_____ occurs when a selling company agrees to accept goods from the buying country as partial payment.

Accepted Answer

The answer of _____ occurs when a selling company agrees...

Question 16

_____ occurs when a firm physically builds a plant in another country or provides a service, equipment, or technology to support the plant; the firm then agrees to take a portion of the plant's output as payment.

Accepted Answer

Buy-back occurs when a firm agrees to build a plant or provide equipment/technology in another country and accepts some of the plant's output as payment. This arrangement is often used in international trade to facilitate deals where direct monetary exchange may be difficult or when fostering long-term relationships and technology transfer.

Question 17

According to the CISG, a/an _____ is one of the countries that have ratified the treaty.

Accepted Answer

The term used by the CISG for a country that has ratified the treaty is "contracting state." Therefore, option D is the correct answer. A rogue state (option A) is not a term used by the CISG, and independent commonwealth (option B) and trading block (option C) are not directly related to the CISG. Option E is incorrect as the CISG is still in force.

Question 18

Which of the following statements regarding countertrade is false?

Accepted Answer

Countertrade is not a simple process as it involves complex negotiations and arrangements, and it may not necessarily avoid currency exchange fluctuations. Therefore, statement E is false.

Question 19

All of the following are elements of total cost for worldwide sourcing except _____.

Accepted Answer

Domestic income taxes are not directly related to total cost for worldwide sourcing, while the other options are all potential elements that can impact total cost.

Question 20

A FTZ _____ is approved for a specific use or a specific company.

Accepted Answer

A subzone is a specific area within an existing FTZ that is approved for a specific use or a specific company. General-purpose zones are designed for multiple users engaged in a variety of different activities, and offset zones and CISG are not related to FTZs.

Quiz 10: Worldwide Sourcing

All of the following are elements of total cost for worldwide sourcing except _____.

_____ agreements require the seller to purchase some agreed-uponpercentage of goods from a country over a specified period but allow a company to fulfill its countertrade requirement with any company or industry in the country.

_____ requires a selling firm to purchase a specified amount of goods from the country that purchased its products.

A FTZ _____ is typically housed in a port or an industrial park and is available to multiple companies.

_____ is a broad term that refers to all international and domestic trade where buyer and seller have at least a partial exchange of goods for goods.

All of the following are typical reasons why a country imposes countertrade demands except _____.

A/An _____ can be changed or canceled at any time by the buyer without the seller's consent.

_____ mean(s) that no duties or quota charges will be placed on goods that are reexported from the FTZ.

A/An _____ is a secure location approved by the appropriate U.S. Customs and Border Protection (CBP) office.

_____ is a process that involves the straight exchange of goods for goods with no exchange of currency.

All of the following are elements of total cost for worldwide sourcing except _____.

The _____ was passed by Congress in 1977 to prevent companies from making questionable or illegal payments to foreign government officials, politicians, and political parties.

A/An _____ can only be changed or canceled upon agreement of all parties.

A/An _____ is issued by the purchaser's bank in conjunction with an affiliate bank in the seller's country which assures the seller that the funds are in the bank.

_____ occurs when a selling company agrees to accept goods from the buying country as partial payment.

_____ occurs when a firm physically builds a plant in another country or provides a service, equipment, or technology to support the plant; the firm then agrees to take a portion of the plant's output as payment.

According to the CISG, a/an _____ is one of the countries that have ratified the treaty.

Which of the following statements regarding countertrade is false?

All of the following are elements of total cost for worldwide sourcing except _____.

A FTZ _____ is approved for a specific use or a specific company.