GMS 522 CHAPTER #11 EXAM
QUESTIONS WITH CORRECT ANSWERS
Transfer pricing (Approaches) - arms-length - Answer-transferred at price that third
party would charge (govt like)
Transfer Pricing - Main Issues - Answer-closer govt scrutiny (Cameco vs. CRA - Swiss
sub uranium < tax)
Terms of Sale - FOB - Answer-ex: package/get to port/load, im: cost, unload, customs
Terms of Sale - CIF - Answer-ex: package/port/un-upload, im: customs, inland transport
($+insure+trans)
Price escalation - Answer-price set by intermediary costs other interns in marketing
channel
Price escalation - price charges - Answer-Price charges to foreign consumer > price in
manufacturers home country
Price escalation - not uniform across markets - Answer-consumers shop around,
distributors lose out
Price escalation - strategies to deal - Answer-manufacturer overseas, adapt product,
shorten dist channel
Payments for Exports - Cash In Advance - Answer-immediate money, no exporter risk /
fav (not widely used)
Payments for export - Letter of credit - Answer-bank issued at buyer request (bill of
lading, consular invoice)
Letter of Credit - Revocable vs. irrevocable - Answer-≠modified/canceled w/ exporter
writes
Letter of Credit - Confirmed vs Unconfirmed - Answer-bank = pay even if importer
defaults
Letter of Credit - revolvings vs non-revolving - Answer-one specific international
transaction
Payments for export - Open Account - Answer-exporter at risk for non payment / imp fav
(normal domestic)
QUESTIONS WITH CORRECT ANSWERS
Transfer pricing (Approaches) - arms-length - Answer-transferred at price that third
party would charge (govt like)
Transfer Pricing - Main Issues - Answer-closer govt scrutiny (Cameco vs. CRA - Swiss
sub uranium < tax)
Terms of Sale - FOB - Answer-ex: package/get to port/load, im: cost, unload, customs
Terms of Sale - CIF - Answer-ex: package/port/un-upload, im: customs, inland transport
($+insure+trans)
Price escalation - Answer-price set by intermediary costs other interns in marketing
channel
Price escalation - price charges - Answer-Price charges to foreign consumer > price in
manufacturers home country
Price escalation - not uniform across markets - Answer-consumers shop around,
distributors lose out
Price escalation - strategies to deal - Answer-manufacturer overseas, adapt product,
shorten dist channel
Payments for Exports - Cash In Advance - Answer-immediate money, no exporter risk /
fav (not widely used)
Payments for export - Letter of credit - Answer-bank issued at buyer request (bill of
lading, consular invoice)
Letter of Credit - Revocable vs. irrevocable - Answer-≠modified/canceled w/ exporter
writes
Letter of Credit - Confirmed vs Unconfirmed - Answer-bank = pay even if importer
defaults
Letter of Credit - revolvings vs non-revolving - Answer-one specific international
transaction
Payments for export - Open Account - Answer-exporter at risk for non payment / imp fav
(normal domestic)
