Chapitre 16 Flashcards

Question

bankers acceptance vs trade acceptance

Answer 1

When a time draft is drawn on and accepted by a bank, it is called a banker’s acceptance. It becomes a promise to pay. When it is drawn on and accepted by a business firm, it is called a trade acceptance.

Answer 2

1) Importer orders good 2) exporter agrees to fill order under letter of credit 3) importer arrangers for letter of credit with BofP 4) Bop send letter of Credit to BofNY 5) BofNY informs exporter of letter of credit 6) US exporter ships the good and an official of the carrier gives the exporter a bill of landing 7) US exporter present 90 day time draft on the bank of Paris in accordance with its letter of credit and the bill of ladind to BofNY. the exporter endorses the bill of lading so title to the good is transfered to Bof NY 8)BofNY send draft and bill of lading to BofP. BofP accepts to pay in 90 days. 9)BofP returns accepted draft. 10) BofNY tells #9 to exporter 11) exporter sells the draft to BofNY at a discount 12)BoyP tells importer arrival of doc. importers will pay in 90 days. BofP releases doc so importer can get shippment 13) 90 days later BofP is paid 14) BofP pays holder so in this case BofNY **refer to FIGURE 16.6

Answer 3

Issued to the exporter by the carrier transporting the merchandise. 3 purposes: 1) a receipt – carrier has received the merchandise. 2) a contract – carrier is obligated to transport it. 3) a document of title – can be used to get paid or obtain written promise of payment before the merchandise arrive at its destination. **Can also function as collateral against which funds may be advanced to the exporter by its local bank before or during shipment and before final payment by the importer.

Answer 4

Assists in the financing of U.S. exports of products and services to support U.S. employment and market competitiveness. Supplements private capital lending with various loan and loan-guarantee programs. -Guarantees repayment of medium- and long-term loans that U.S. commercial banks make to foreign borrowers for purchasing U.S. exports. -Also lends dollars to foreign borrowers for use in purchasing U.S. exports.

Answer 5

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. **Provided by the Foreign Credit Insurance Association (F C I A).

Answer 6

Trade of goods and services for other goods and services. Alternative means of structuring an international sale when conventional means of payment are difficult, costly, or nonexistent. Barterlike agreements.

Answer 7

Popular among developing nations that lack the foreign exchange reserves required to purchase necessary imports. Communist also... RECAP : lack foreign exchange reserves and non-convertible money country

Answer 8

Barter, Counterpurchase, Offset, switch trading, Compensation/buybacks

Answer 9

direct exchange of goods and/or services between two parties without a cash transaction. Risks: First, if goods are not exchanged simultaneously, one party ends up financing the other for a period. Second, firms engaged in barter run the risk of having to accept goods they do not want, cannot use, or have difficulty reselling at a reasonable price.

Answer 10

reciprocal buying agreement.

Answer 11

an agreement to purchase goods and services with a specified percentage of proceeds from an original sale in that country from any firm in the country.

Answer 12

the use of a specialized third-party trading house in a countertrade/offset arrangement. sell the arrangement to third party at a discount

Answer 13

an agreement to accept a percentage of a plant’s output as payment for contract to build a plant.

Answer 14

Can give a firm a way to finance an export deal when other means are not available. A countertrade agreement may be required by the government of a country to which a firm is exporting goods or services. Can become a strategic marketing weapon, e.g., between Boeing and Airbus, the one that accepts countertrade offer penetrates the market. RECAP : good when lack of currency, sometime obligated , marketing strat.

Answer 15

Firms would normally prefer to be paid in hard currency. May involve the exchange of unusable or poor-quality goods that the firm cannot dispose of profitably. **Countertrade is most attractive to large, diverse multinational enterprises that can use their worldwide network of contacts to dispose of goods acquired in countertrading. RECAP : Not money (unquantified, poor quality)