Deck 17: Pricing Strategies: Countertrade and Terms of Salepayment

Question 1

Countertrade is a goods-for-goods deal

Answer 1

True

Question 2

In an offset, a foreign supplier is required to manufacture the product locally as an exchange for the right to sell the product there

Answer 2

True

Question 3

The relationship between a country's credit rating and its propensity to countertrade is very strong

Answer 3

False

Question 4

Vertically integrated firms are likely to benefit from countertrade

Question 5

A country that requires countertrade as a trade condition is able to shift the extra costs of doing business to the seller

Question 6

A country that requires countertrade as a trade condition must alone bear the cost of inefficiency

Question 7

Countertrade does not increase the cost of doing business

Question 8

For a barter or countertrade to be completed, it requires a "double coincidence of wants"

Question 9

Recognizing the importance of countertrade, the US government encourages federal agencies to promote countertrade

Question 10

It is the policy of the US government to encourage US government agencies and US firms to use countertrade when doing business with less developed countries

Question 11

Problems of countertrade are more psychological rather than real obstacles

Question 12

Ex dock should not be used in quotations for export

Question 13

If currency convertibility is a problem, FOB terms are desirable for both the buyer and the seller

Question 14

Importers prefer FOB price quotes to CIF price quotes

Question 15

When a sight draft is used, the risk to an exporter is that a buyer can refuse the goods shipped

Question 16

A bankers' acceptance is not a negotiable instrument

Question 17

Banks prefer to handle a transferable letter of credit instead of being involved with a back-to-back letter of credit

Question 18

Both the letter of credit and bill of exchange can be discounted

Question 19

A revocable and unconfirmed letter of credit gives the exporter maximum security and minimum delay in receiving payment

Question 20

The existence of a letter credit is not a substitution for proper business investigation concerning buyers

Question 21

The most significant portion of the cost for a letter of credit is confirmation