What are the four methods of finance for international trade?

Forms of Finance for International Businesses

Quiz
•
Business
•
12th Grade
•
Hard

Latifa Al-Harazi
Used 5+ times
FREE Resource
9 questions
Show all answers
1.
OPEN ENDED QUESTION
2 mins • 1 pt
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2.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
The exporter will arrange for the buyer of the product to send payment before it is delivered
Export credit
Payment by the importer
Bank loan
Letters of credit
3.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
What is a benefit of this method: prepayment by the importer
This provides security for both parties
It means that it will have greater liquidity as cash flows into the business before the product has actually been sold
This transfers the risk from the seller to the bank
This means that the business will have to fund the export itself, deferring payment to a later date
4.
MULTIPLE SELECT QUESTION
1 min • 1 pt
Total or part payment in advance may be necessary when importing goods if:
Political situation
Little trust
High demand for goods and paying in advance price can be fixed at a particular level
Importer new and cannot negotiate better terms
5.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
What is a letter of credit?
A receipt for the purchase of the goods
A letter from the buyer promising that they will pay for the goods
An amount of money received from the bank
A bank guarantee that the seller of a product will receive an agreed payment from the buyer
6.
MULTIPLE SELECT QUESTION
1 min • 1 pt
Why use letters of credit? Select two.
This provides security for both parties
This provides security for the exporter, knowing that they do not have to worry about credit control
This is a more traditional style arrangement, with businesses borrowing directly from financial institutions to import products
This transfers the risk from the seller to the bank
7.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
What is export credit?
When exporters borrow money from the bank
When importers receive an extension on their bank loan
Financial support or guarantees that are given to foreign businesses to help in buying goods or services from UK exporters
When part of the payment is paid up-front
8.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
What does export credit mean for the British company exporting overseas?
This means that they will receive only part of the payment up front
This means that the business will have to fund the export itself
This means that they will have to wait for the bank's approval
This means that there is little trust between the two companies
9.
MULTIPLE CHOICE QUESTION
2 mins • 1 pt
What is the benefit of working with a bank when wanting to trade internationally?
Banks charge interest on loans
Banks ensure that loans are paid back and keep companies regulated
Banks have vast experience of international business and can be a great source of financial and non-financial support for businesses looking to trade globally
There is little benefit from banks as there are better methods of support nowadays
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