Finance TB Chap 20

International Financial Management, 8e (Eun)
Chapter 20 International Trade Finance
1) Forfaiting (forfeiting) meets Islamic finance practices.
Answer: TRUE
Topic: International Finance in Practice: First Islamic Forfaiting Fund Set Up
Accessibility: Keyboard Navigation
2) International trade is more difficult and risky from the exporter's perspective than is
domestic trade because
A) the exporter may not be familiar with the buyer, and thus not know if the importer is a
good credit risk.
B) 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.
C) political instability makes it risky to ship merchandise abroad to certain parts of the world.
D) all of the options
Answer: D
Topic: A Typical Foreign Trade Transaction
3) Conducting international trade transactions is difficult in comparison to domestic trades.

Which of the following are false statements regarding this reality?
A) Commercial and political risks enter into the equation, which are not factors in domestic trade.
B) It is important for a country to be competitively strong in international trade in order for
its citizens to have the goods and services they need and demand.
C) It is generally the case that the costs of international trade outweigh the benefits.
Answer: C
4) A typical foreign trade transaction requires three basic documents:

A) letter of credit, time draft, and bill of lading.
B) letter of credit, banker's acceptance, and bill of lading.
C) letter of credit, time draft, and a banker's acceptance.
D) none of the options
Answer: A
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5) A time draft can become a negotiable money market instrument called
A) Eurodollars.
B) a banker's acceptance.
C) a letter of credit.
D) a bill of lading.
Answer: B
6) Forfaiting, in which a bank purchases at a discount from an importer, is a series of promissory

notes in favor of an exporter,
A) is a short-term form of trade financing.
B) is a medium-term form of trade financing.
C) is a long-term form of trade financing.
Answer: B
Topic: Forfeiting
7) When a bank purchases at a discount from an importer a series of promissory notes in favor
of an exporter, this is called
A) accounts receivable financing.
B) asset backed commercial paper.
C) discounting.
D) forfeiting.
Answer: D
Topic: Forfeiting
8) The Export-Import Bank provides competitive assistance to U.S. exporters through

A) direct loans to foreign importers.
B) loan guarantees.
C) credit insurance to U.S. exporters.
Answer: D
Topic: Government Assistance in Exporting
2
9) Countertrade transactions are
A) becoming obsolete as a means of conducting international trade transactions.
B) gaining renewed prominence as a means of conducting international trade transactions.
C) strictly a form of barter.
Answer: B
Topic: Countertrade
10) There are several types of countertrade transactions

A) none of which involve the use of money.
B) and in each type, the seller provides the buyer with goods or services in return for a
reciprocal promise from the seller to purchase goods or services from the buyer.
C) and in each type, the seller provides the buyer with goods or services in return for a
reciprocal promise from the buyer to stand ready to sell goods or services to the buyer.
Answer: B
Topic: Countertrade
11) The three basic documents needed in a foreign trade transaction are
A) letter of credit, time draft, and proof of inspection.
B) letter of credit, time draft, and a bill of lading.
C) letter of credit, bill of lading, and insurance.
D) time draft, bill of lading, and a pro forma statement.
Answer: B
12) The primary methods of payment for foreign trades, ranked in the order of most secure to
least secure for the exporter is
A) open account, consignment, letter of credit/time draft, and cash in advance.
B) consignment, letter of credit/time draft, cash in advance, and open account.
C) cash in advance, letter of credit/time draft, consignment, and open account.
D) cash in advance, letter of credit/time draft, open account, and consignment.
Answer: C
3
13) A bill of lading
A) is a document issued by the common carrier specifying that it has received the goods
for shipment; it can serve as title to the goods.
B) later becomes a banker's acceptance.
C) is a time draft that calls for payment upon physical delivery of goods.
Answer: A
14) A time draft

A) is a document issued by the common carrier specifying that it has received the goods
for shipment; it can serve as title to the goods.
B) later becomes a banker's acceptance.
C) is a written order instructing the importer or his agent that calls for payment the
amount specified on its face on a certain date.
Answer: C
15) A banker's acceptance is created when

A) a document issued by the common carrier specifies that it has received the goods for
shipment; it can serve as title to the goods.
B) after taking title to the goods via a bill of lading, the importer's bank accepts the time draft.
C) a time draft calls for payment upon physical delivery of goods matures.
Answer: B
16) In a consignment sale

A) the importer only pays the exporter once he sells the merchandise.
B) the exporter retains title to the merchandise that is shipped.
C) if the goods do not sell, the importer can return them to the exporter.
Answer: D
4
17) Suppose the face amount of a promissory note is $1,000,000 and the importer's bank
charges an acceptance commission of 1.5 percent. The note is for 60 days. Calculate the amount
of the acceptance commission that the bank will charge.
A) $997,500
B) $15,000 = $1,000,000 × (0.015)
C) $2,500
Answer: C
Explanation: $1,000,000 × 0.015 = $15,000 / 12 = $1,250 (per month) × 2 = $2,500 (for 2
months, or 60 days).
18) The sends a purchase order to the . The applies to his bank for
a letter of credit.
A) importer; exporter; exporter
B) exporter; importer; importer
C) importer; exporter; importer
D) exporter; importer; exporter
Answer: C
19) The 's bank sends the letter of credit to the 's bank. After sending
the merchandise, the gives the shipping
documents and time draft to his bank.
A) importer; exporter; exporter
B) exporter; importer; importer
C) importer; exporter; importer
D) exporter; importer; exporter
Answer: A
20) Banker's acceptances usually have maturities ranging from

A) 30 to 180 days.
B) 90 to 360 days.
C) 1 year to 5 years.
D) over 5 years.
Answer: A
5
21) Assume the time from acceptance to maturity on a $2,000,000 banker's acceptance is 90
days. Further assume that the importing bank's acceptance commission is 1.25 percent and that
the market rate for 90-day B/As is 6.0 percent. Calculate the amount the exporter will receive if
he discounts the B/A with the importer's bank.
A) $1,993,750
B) $1,999,375
C) $1,963,750
D) $1,009,375
Answer: C
Explanation: $2,000,000 × (1 − (0.06 + 0.0125) × (90/360)) = $1,963,750
A) $906,250
B) $909,375
C) $968,750
D) $993,750
Answer: C
days. Further assume that the importing bank's acceptance commission is 1.5 percent and that the
market rate for 90-day B/As is 6.0 percent. Calculate the amount the exporter will receive if he
discounts the B/A with the importer's bank.
A) $4,981,750
B) $4,906,250
C) $4,009,375
Answer: B
A) $3,993,750
B) $3,915,000
C) $3,975,000
D) $3,009,375
Answer: B
6
days. Further assume that the importing bank's acceptance commission is 1 percent and that the
discounts the B/A with the importer's bank.
A) $9,993,750
B) $9,900,000
C) $9,975,000
D) $9,009,375
Answer: B
market rate for 90-day B/As is 3.0 percent. Calculate the amount the banker will receive if the
exporter discounts the B/A with the importer's bank.
A) $200,000
B) $100,000
C) $25,000
D) $75,000
Answer: C
he holds it to maturity.
A) $1,993,750
B) $1,999,375
C) $1,963,750
D) $1,009,375
Answer: A
Explanation: $2,000,000 × (1 − 0.0125 × (90/360)) = $1,993,750
7
A) $906,250
B) $909,375
C) $968,750
D) $993,750
Answer: D
days. Further assume that the importing bank's acceptance commission is 1.5 percent and that the
holds it to maturity.
A) $4,981,250
B) $4,906,250
C) $4,009,375
Answer: A
Explanation: $5,000,000 × (1 − 0.015 × (90/360)) = $4,981,250
A) $3,993,750
B) $3,999,375
C) $3,975,000
D) $3,009,375
Answer: C
Explanation: $4,000,000 × (1 − 0.0125 × (90/360)) = $3,975,000
8
holds it to maturity.
A) $9,993,750
B) $9,999,375
C) $9,975,000
D) $9,009,375
Answer: C
market rate for 90-day B/As is 3.0 percent. The bond equivalent yield that the exporter pays in
discounting the B/A is
A) 3.05 percent.
B) 3.01 percent.
C) 3.07 percent.
Answer: A
Explanation: [($9,900,000 / $9,975,000) − 1] × (365/90) = − 0.0305 = − 3.05%, where
$9,975,000 = $10,000,000 (1 − 0.01 × (90/360)) and $9,900,000 = $10,000 × (1 − (0.03 + 0.01) ×
(90/360)). The time from acceptance to maturity on a $3,000,000 banker's acceptance is 90 days.
33) The time from acceptance to maturity on a $3,000,000 banker's acceptance is 90 days.
If the importing bank's acceptance commission is 1.25 percent, determine the amount the exporter
will receive if he holds the B/A until maturity.
A) $2,945,625
B) $2,990,625
C) $2,906,250
D) $3,009,375
Answer: B
Explanation: $3,000,000 × (1 − 0.0125 × (90/360)) = $2,990,625
9
If the market rate for 90-day B/As is 6.0 percent, calculate the amount the exporter will receive if
A) $2,945,625
B) $2,990,625
C) $3,000,000
D) $3,009,375
Answer: A
Explanation: $3,000,000 × (1 − (0.06 + 0.0125) × (90/360)) = $2,945,625
The bond equivalent yield that the exporter pays in discounting the B/A is
A) 6.10 percent.
B) 9.29 percent.
C) 6.02 percent.
Answer: A
Explanation: [($2,945,625 / $2,990,625) − 1] × (365 / 90) = − 0.0610 = − 6.10%, where
$2,990,625 = $3,000,000 × (1 − 0.0125 × (90/360)) and $2,945,625 = $3,000,000 × (1 − (0.06 +
0.0125) × (90/36))
market rate for 90-day B/As is 3.0 percent. The bond equivalent yield that the bank earns in
holding the B/A to maturity is:
A) 0.2287 percent
B) 0.102 percent
C) 0.406 percent
Answer: C
Explanation: [($10,000,000 / $9,990,000) − 1] × (365/90) = 0.004059 = 0.406%, where
$9,990,000 = $10,000,000 × (1 − (0.03 + 0.01) × (90/360))
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the market rate for 180-day B/As is 5.0 percent. The bond equivalent yield that the bank earns in
holding the B/A to maturity is
A) 13.08 percent.
B) 6.54 percent.
C) 4.06 percent.
Answer: B
Explanation: [($2,000,000 / $1,937,500) − 1] × (365/180) = 0.0654 = 6.54%, where $1,937,500 =
$2,000,000 × (1 − (0.05 + 0.0125) × (180/360))
38) The term "forfaiting"

A) means relinquishing, waiving, yielding, and penalty.
B) is a type of medium-term trade financing used to finance the sale of capital goods.
C) involves the sale of promissory notes signed by the importer in favor of the exporter, who
might sell the notes at a discount from face value.
D) is a type of medium-term trade financing used to finance the sale of capital goods, and
involves the sale of promissory notes signed by the importer in favor of the exporter, who might
sell the notes at a discount from face value.
Answer: D
Topic: Forfaiting
39) In a forfaiting transaction, the forfait is usually

A) the importer.
B) the exporter.
C) the bank.
D) the title to the goods, or the bill of lading.
Answer: C
Topic: Forfaiting
40) In a forfaiting transaction, the forfait

A) buys the notes at a discount from face value from the importer.
B) buys the notes at a discount from face value from the exporter.
C) redeems the notes at a face value to the exporter.
Answer: B
Topic: Forfaiting
11
41) In the event of a default
A) the forfait does not have recourse against the exporter in the event of a default by the importer.
B) the forfait does have recourse against the exporter in the event of a default by the importer
C) the exporter will have to return the goods to the importer.
Answer: A
Topic: Forfaiting
42) One of the steps to follow to develop an investment fund which has been structured to adhere
to Shari'ah principles whilst at the same time making use of forfaiting assets was
A) the fund sponsors had to be careful in ensuring that the pool of non-Islamic forfaiting assets
was not used to directly satisfy the Islamic compliant obligations under the commodity and trade
financing arrangements.
B) screening is required to ensure that the products underlying the LCs do not run counter
to Shari'ah principles.
C) there had to be a sign off by Islamic scholars to verify that Shari'ah strictures had been met
with.
Answer: D
43) Under the terms of Islamic finance (Shari'ah)

A) selling debt at a reduced value is strictly forbidden.
B) charging interest is OK, but short selling stock is forbidden.
C) buying low and selling high is forbidden.
Answer: A
44) Among the reasons put forth for government assistance in exporting
A) success in international trade is fundamentally important for a country.
B) success in exporting implies that there is demand for a country's products, that its labor force
is employed, and that some resources are used for technological advancement.
C) to be successful in international trade means that the government is popular.
D) success in international trade is fundamentally important for a country, and success in
exporting implies that there is demand for a country's products, that its labor force is employed,
and that some resources are used for technological advancement.
Answer: D
12
Topic: Government Assistance in Exporting
13
45) Export-Import Bank (Ex-Im bank) is an independent agency of the United States
government that facilitates and finances U.S. export trade. Ex-Im bank's purpose is to provide
financing in situations where private financial institutions are unable or unwilling to because of
which of the following reasons:
(i) The loan maturity is too long.

(ii) The amount of the loan is too large.
(iii) The loan risk is too great.
(iv) The importing firm has difficulty obtaining hard currency for payment.
(v) There are no futures or forward contracts available for foreign exchange transactions.
A) (i) and (ii)

B) (i), (ii), and (iii)
C) (i), (ii), (iii), and (iv)
D) (i), (ii), (iii), (iv), and (v)
Answer: C
Topic: The Export-Import Bank and Affiliated Organizations
46) Through its Export Credit Insurance Program, Ex-Im bank helps U.S. exporters develop
and expand their overseas sales by
A) protecting them against loss should a foreign buyer default.
B) guaranteeing the loans made by private financial institutions to foreign importers.
C) providing liquidity via the purchase of notes issued by Ex-Im bank to finance the loans.
Answer: A
47) Through its Medium and Long-Term Guarantee Program, Ex-Im bank helps U.S.
exporters develop and expand their overseas sales by
A) protecting them against loss should a foreign buyer default.
B) guaranteeing the loans made by private financial institutions to foreign importers.
C) providing liquidity via the purchase of notes issued by Ex-Im bank to finance the loans.
Answer: B
14
48) The British version of the Ex-Im bank
A) helps U.S. exporters develop and expand their overseas sales.
B) is called Inland Revenue.
C) is called the Exports Credits Guarantee Department.
D) is called Ex-Im bank U.K.
Answer: C
49) The Ex-Im bank helps U.S. exporters develop and expand their overseas sales by
A) working capital guarantees.
B) direct loans to foreign borrowers.
C) loan guarantees.
D) credit insurance.
Answer: D
50) The term "countertrade" refers to

A) many different types of transactions in which the seller provides a buyer with goods or
services and promises in return to purchase goods or services from the buyer.
B) barter, clearing arrangement, and switch trading.
C) buy-back, counterpurchase, and offset.
Answer: D
Topic: Countertrade
51) A clearing arrangement

A) is also called a bilateral clearing agreement.
B) is a form of barter.
C) involves two parties agreeing to buy a specified amount of goods or services from one another.
Answer: D
Topic: Countertrade
15
52) A switch trade
A) is the purchase by a third party of one country's a clearing agreement balance for hard currency.
B) is a form of barter.
Answer: A
Topic: Countertrade
53) A buy-back transaction

A) is also called a bilateral clearing agreement.
B) involves a technology transfer via the sale of a manufacturing plant: as part of the terms,
the seller of the plant agrees to purchase a certain portion of the plant output.
Answer: B
Topic: Countertrade
54) A counterpurchase
A) involves a technology transfer via the sale of a manufacturing plant: as part of the terms,
B) is similar to a buy-back transaction but the seller of the plant agrees to buy unrelated goods.
C) is a form of barter.
D) involves two parties agreeing to buy a specified amount of goods or services from one another.
Answer: B
Topic: Countertrade
55) An offset transaction

A) can be viewed as a counterpurchase trade agreement involving the aerospace/defense industry.
B) involves a technology transfer via the sale of a manufacturing plant: as part of the terms,
C) is the purchase by a third party of one country's a clearing agreement balance for hard currency.
Answer: A
Topic: Countertrade
16
56) A buy-back transaction
A) can be viewed as direct foreign investment in the purchasing country.
B) can be viewed as direct foreign investment in the exporting country.
C) can be viewed as indirect foreign investment in the purchasing country.
Answer: A
Topic: Countertrade
57) Countertrade transactions

A) are included in official trade statistics.
B) are not included in official trade statistics.
C) reduce trade imbalances and trade deficits.
D) are included in official trade statistics, and also reduce trade imbalances and trade deficits.
Answer: B
Topic: Countertrade
58) The armed forces of leads all government agencies in countertrade.

A) the United States
B) Great Britain
C) China
D) the Philippines
Answer: D
Topic: International Finance in Practice: Armed Forces Tops in Countertrade List
59) Arguments in favor of countertrade include benefits such as

A) conservation of cash or hard currency.
B) improvement of trade imbalances.
C) maintenance of export prices.
Answer: D
Topic: Some Generalizations about Countertrade
17
60) A typical foreign trade transaction requires which three basic documents?
A) letter of credit, bill of lading, and shipping documents
B) time draft, banker's acceptance, and bill of lading
C) letter of credit, time draft, and bill of lading
D) letter of credit, banker's acceptance, and bill of lading
Answer: C
Topic: Summary
61) The time from acceptance to maturity on a $2,000,000 banker's acceptance is 90 days. The
importing bank's acceptance commission is 1.25 percent and the market rate for 90-day B/As is 6
percent.
Determine the amount the exporter will receive if he holds the B/A until maturity.
Answer: $2,000,000 × = $1,993,750.
Topic: Summary
percent.
Determine the amount the exporter will receive if he discounts the B/A with the importer's bank.
Answer: $2,000,000 × = $1,963,750.
Topic: Summary
18
percent.
Determine the bond equivalent yield the importer's bank will earn from discounting the B/A with
the exporter.
Answer: If the exporter holds the B/A to maturity, he will receive
$2,000,000 × = $1,993,750.
If the exporter discounts the B/A with the importer bank he will receive
$2,000,000 × = $1,963,750.
× = -0.0610
Topic: Summary
percent.
If the exporter's opportunity cost of capital is 11 percent, should he discount the B/A or hold it to
maturity?
Answer: If his cost of funds > 6.1% compounded quarterly (EAR = 6.24%), he should discount
the B/A. The exporter pays the acceptance commission regardless of whether he discounts the
B/A or holds it to maturity, hence it is not marginal to a decision to discount the B/A. You could
also make this determination based on this calculation:
$1,963,750 × = $2,017,753 > $1,993,750
Topic: Summary
19
percent.
Calculate the amount the banker will receive if the exporter discounts the B/A with the importer's
bank.
Answer: $6,250 = $2,000,000 × (0.0125) ×

Topic: Summary
importing bank's acceptance commission is 1.00 percent and that the market rate for 60-day B/As
is 5 percent.
Answer: $1,000,000 × = $998,333.33.
Topic: Summary
is 5 percent.
Answer: $1,000,000 × = $990,000.
Topic: Summary
20
is 5 percent.
the exporter.
$1,000,000 × = $998,333.33.
$1,000,000 × = $990,000.
× + -0.050
Topic: Summary
is 5 percent.
maturity?
Answer: If his cost of funds > 5% compounded six times per year (EAR = 5.11%), he should
discount the B/A. The exporter pays the acceptance commission regardless of whether he
discounts the B/A or holds it to maturity, hence it is not marginal to a decision to discount the
B/A.
You could also make this determination based on this calculation:
$990,000 × = $1,013,709.71 > $998,333.33
Topic: Summary
21
is 5 percent.
bank.
Answer: $1,666.67 = $1,000,000 × (0.01) ×

Topic: Summary
71) The time from acceptance to maturity on a $500,000 banker's acceptance is 270 days. The
importing bank's acceptance commission is 0.75 percent and that the market rate for 270-day
B/As is 4 percent.
Answer: $500,000 × = $497,187.50
Topic: Summary
B/As is 4 percent.
Answer: $500,000 × = $482,187.50
Topic: Summary
22
B/As is 4 percent.
the exporter.
$500,000 × = $497,187.50
$500,000 × = $482,187.50
× = -0.0408
Topic: Summary
B/As is 4 percent.
maturity?
Answer: If his cost of funds > 4.08% compounded 1⅓ times per year (EAR = 4.10%), he should
B/A. You could also make this determination based on this calculation:
$482,187.50 × = $521,967.97 > $497,187.50
Topic: Summary
23
B/As is 4 percent.
bank.
Answer: $2,812.50 = $500,000 × (0.0075) ×

Topic: Summary
The importing bank's acceptance commission is 2 percent and the market rate for 360-day B/As
is 3 percent.
Answer: $6,000,000 × = $5,880,000.
Topic: Summary
is 3 percent.
Answer: $6,000,000 × = $5,700,000.
Topic: Summary
24
78) The time from acceptance to maturity on a $6,000,000 banker's acceptance is 360 days.The
importing bank's acceptance commission is 2 percent and the market rate for 360-day B/As is 3
percent.
the exporter.
$6,000,000 × = $5,880,000.
$6,000,000 × = $5,700,000.
× = -0.031
Topic: Summary
is 3 percent.
maturity?
Answer: If his cost of funds > 3.1% compounded annually (EAR = 3.10%), he should discount
$5,700,000 × = $6,372,000 > $5,880,000
Topic: Summary
25
is 3 percent.
bank.
Answer: $120,000 = $6,000,000 × (0.02) ×

Topic: Summary
importing bank's acceptance commission is 2.50 percent and the market rate for 180-day B/As is
2 percent.
Answer: $50,000 × = $49,375.
Topic: Summary
2 percent.
Answer: $50,000 × = $48,875.
Topic: Summary
26
2 percent.
the exporter.
$50,000 × = $49,375.
$50,000 × = $48,875.
× = -0.0205
Topic: Summary
percent.
maturity?
Answer: If his cost of funds > 2.05% compounded semiannually (EAR = 2.06%), he should
$48,875 × = $51,563.13 > $49,375
Topic: Summary
27
2 percent.
bank.
Answer: $625 = $50,000 × (0.025) ×

Topic: Summary
percent.
Answer: $300,000 × = $299,250.
Topic: Summary
percent.
Answer: $300,000 × = $298,250.
Topic: Summary
28
percent.
the exporter.
$300,000 × = $299,250.
$300,000 × = $298,250.
× = -0.0407
Topic: Summary
percent.
maturity?
Answer: If his cost of funds > 4.07% compounded monthly (EAR = 4.14%), he should discount
$298,250 × = $300,983.96 > $299,250
Topic: Summary
29
90) The time from acceptance to maturity on a $300,000 banker's acceptance is 30 days.The
percent.
bank.
Answer: $750 = $300,000 × (0.03) ×

Topic: Summary
is 4½ percent.
Answer: $30,000,000 × = $29,943,750
Topic: Summary
is 4½ percent.
Answer: $30,000,000 × = $29,775,000
Topic: Summary
30
is 4½ percent.
the exporter.
$30,000,000 × = $29,943,750
$30,000,000 × = $29,775,000
× = -0.0457
Topic: Summary
is 4½ percent.
maturity?
Answer: If his cost of funds > 4.57% compounded semi quarterly (EAR = 4.66%), he should
$29,775,000 × = $30,184,406.25 > $29,943,750
Topic: Summary
31
is 4½ percent.
bank.
Answer: $56,250 = $30,000,000 × (0.015) ×

Topic: Summary
importing bank's acceptance commission is 3½ percent and that the market rate for 90-day B/As
is 5 percent.
Answer: $1,000,000 × = $991,250.
Topic: Summary
is 5 percent.
Answer: $1,000,000 × = $978,750.
Topic: Summary
32
is 5 percent.
the exporter.
$1,000,000 × = $991,250.
$1,000,000 × = $978,750.
× = -0.0511
Topic: Summary
is 5 percent.
maturity?
Answer: If his cost of funds > 5.11% compounded quarterly (EAR = 5.21%), he should discount
$978,750 × = $1,005,665.63 > $991,250
Topic: Summary
33
is 5 percent.
Calculate the amount the banker will receive if the exporter discounts the B/A with the
importer's bank.
Answer: $8,750 = $$1,000,000 × (0.035) ×

Topic: Summary
34

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International Financial Management, 8e (Eun)

Chapter 20 International Trade Finance

1) Forfaiting (forfeiting) meets Islamic finance practices.

3) Conducting international trade transactions is difficult in comparison to domestic trades.

4) A typical foreign trade transaction requires three basic documents:

6) Forfaiting, in which a bank purchases at a discount from an importer, is a series of promissory

8) The Export-Import Bank provides competitive assistance to U.S. exporters through

10) There are several types of countertrade transactions

14) A time draft

15) A banker's acceptance is created when

16) In a consignment sale

20) Banker's acceptances usually have maturities ranging from

38) The term "forfaiting"

39) In a forfaiting transaction, the forfait is usually

40) In a forfaiting transaction, the forfait

43) Under the terms of Islamic finance (Shari'ah)

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(i) The loan maturity is too long.

A) (i) and (ii)

50) The term "countertrade" refers to

51) A clearing arrangement

53) A buy-back transaction

55) An offset transaction

57) Countertrade transactions

58) The armed forces of leads all government agencies in countertrade.

59) Arguments in favor of countertrade include benefits such as

Answer: $2,000,000 × = $1,993,750.

Answer: $2,000,000 × = $1,963,750.

Answer: If the exporter holds the B/A to maturity, he will receive

$1,963,750 × = $2,017,753 > $1,993,750

Answer: $6,250 = $2,000,000 × (0.0125) ×

Answer: $1,000,000 × = $998,333.33.

Answer: $1,000,000 × = $990,000.

Answer: If the exporter holds the B/A to maturity, he will receive

You could also make this determination based on this calculation:

$990,000 × = $1,013,709.71 > $998,333.33

Answer: $1,666.67 = $1,000,000 × (0.01) ×

Answer: $500,000 × = $497,187.50

Answer: $500,000 × = $482,187.50

Answer: If the exporter holds the B/A to maturity, he will receive

$482,187.50 × = $521,967.97 > $497,187.50

Answer: $2,812.50 = $500,000 × (0.0075) ×

Answer: $6,000,000 × = $5,880,000.

Answer: $6,000,000 × = $5,700,000.

Answer: If the exporter holds the B/A to maturity, he will receive

$5,700,000 × = $6,372,000 > $5,880,000

Answer: $120,000 = $6,000,000 × (0.02) ×

Answer: $50,000 × = $49,375.

Answer: $50,000 × = $48,875.

Answer: If the exporter holds the B/A to maturity, he will receive

$48,875 × = $51,563.13 > $49,375

Answer: $625 = $50,000 × (0.025) ×

Answer: $300,000 × = $299,250.

Answer: $300,000 × = $298,250.

Answer: If the exporter holds the B/A to maturity, he will receive

$298,250 × = $300,983.96 > $299,250

Answer: $750 = $300,000 × (0.03) ×

Answer: $30,000,000 × = $29,943,750

Answer: $30,000,000 × = $29,775,000

Answer: If the exporter holds the B/A to maturity, he will receive