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FIN 165 Chapter 16 Questions with Correct Answers |
Updated (100% Correct Answers)
The exporter-importer relationship to a corporation of a foreign importer that
has not previously conducted business with the firm would be an:
A) unaffiliated known.
B) affiliated party.
C) unaffiliated unknown.
D) any of the above Answer: C) unaffiliated unknown.
Which of the following relationships between importing and exporting parties
would require the least detailed contract to conduct business?
A) affiliated party
B) unaffiliated unknown party
C) known unaffiliated party
D) domestic supplier Answer: B) unaffiliated unknown party
Polaris Corporation has made an agreement to ship goods to a foreign firm with
whom they have not entered into a contract for three years. However, the firms
have communicated regularly since the last sale three years ago. This is an
example of an:
A) unaffiliated known party transaction.
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B) unaffiliated unknown party transaction.
C) affiliated party transaction.
D) none of the above Answer: A) unaffiliated known party transaction.
Which of the following is NOT a financial instrument that may be included in an
international trade transaction?
A) Letter of Credit
B) Sight Draft
C) Order bill of lading
D) Federal funds transaction Answer: D) Federal funds transaction
Today, international trade is dominated by transactions between unaffiliated
parties (known or unknown). Answer: False
Because most international transactions are between affiliated parties,
international transaction contracts are less complex, but the management of the
total value of the MNE is more complex. Answer: True
An advantage of trading with an affiliated party for an MNE, compared to an
unaffiliated party, could be reduced contracting costs and less to even no need
to protect against nonpayment. Answer: True
The fundamental dilemma of foreign trade is being unwilling to trust a stranger
in a foreign land. Answer: True
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, 3
The combination of a letter of credit, a sight draft, and an order bill of lading
protect both parties in international transactions from which of the following?
A) the risk of noncompletion
B) the risk of foreign exchange risk (when combined with a various hedging
techniques)
C) the risk that financing will not be available due to foreign exchange risk
D) All of these risks are reduced when using these trade implements. Answer: D)
All of these risks are reduced when using these trade implements.
The risk of noncompletion is most important when:
A) the international trade is recurrent in nature.
B) there is a sustained relationship between the buyer and seller.
C) with an outstanding agreement for recurring shipments.
D) when the relationship is between countries whose currencies are considered
strong. Answer: D) when the relationship is between countries whose currencies
are considered strong.
From a financial management perspective, all of the following are primary risks
associated with an international trade transaction EXCEPT:
A) currency risk
B) default risk
© 2026 All rights reserved
FIN 165 Chapter 16 Questions with Correct Answers |
Updated (100% Correct Answers)
The exporter-importer relationship to a corporation of a foreign importer that
has not previously conducted business with the firm would be an:
A) unaffiliated known.
B) affiliated party.
C) unaffiliated unknown.
D) any of the above Answer: C) unaffiliated unknown.
Which of the following relationships between importing and exporting parties
would require the least detailed contract to conduct business?
A) affiliated party
B) unaffiliated unknown party
C) known unaffiliated party
D) domestic supplier Answer: B) unaffiliated unknown party
Polaris Corporation has made an agreement to ship goods to a foreign firm with
whom they have not entered into a contract for three years. However, the firms
have communicated regularly since the last sale three years ago. This is an
example of an:
A) unaffiliated known party transaction.
© 2026 All rights reserved
,2
B) unaffiliated unknown party transaction.
C) affiliated party transaction.
D) none of the above Answer: A) unaffiliated known party transaction.
Which of the following is NOT a financial instrument that may be included in an
international trade transaction?
A) Letter of Credit
B) Sight Draft
C) Order bill of lading
D) Federal funds transaction Answer: D) Federal funds transaction
Today, international trade is dominated by transactions between unaffiliated
parties (known or unknown). Answer: False
Because most international transactions are between affiliated parties,
international transaction contracts are less complex, but the management of the
total value of the MNE is more complex. Answer: True
An advantage of trading with an affiliated party for an MNE, compared to an
unaffiliated party, could be reduced contracting costs and less to even no need
to protect against nonpayment. Answer: True
The fundamental dilemma of foreign trade is being unwilling to trust a stranger
in a foreign land. Answer: True
© 2026 All rights reserved
, 3
The combination of a letter of credit, a sight draft, and an order bill of lading
protect both parties in international transactions from which of the following?
A) the risk of noncompletion
B) the risk of foreign exchange risk (when combined with a various hedging
techniques)
C) the risk that financing will not be available due to foreign exchange risk
D) All of these risks are reduced when using these trade implements. Answer: D)
All of these risks are reduced when using these trade implements.
The risk of noncompletion is most important when:
A) the international trade is recurrent in nature.
B) there is a sustained relationship between the buyer and seller.
C) with an outstanding agreement for recurring shipments.
D) when the relationship is between countries whose currencies are considered
strong. Answer: D) when the relationship is between countries whose currencies
are considered strong.
From a financial management perspective, all of the following are primary risks
associated with an international trade transaction EXCEPT:
A) currency risk
B) default risk
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