Which of the following is NOT a type of commercial risk?

• Buyer bankruptcy

• Delayed payments

• Product quality issues

• Political instability

What is the primary function of a letter of credit in international trade?

• To guarantee delivery of goods

• To facilitate currency exchange

• To secure payment for the seller

• To provide insurance coverage

Which of the following factors can affect foreign exchange risk?

• Government regulations

• Interest rates

• Economic performance

• All of the above

What is a key strategy to mitigate production and transportation risks?

• Using reliable freight carriers

• Proper packaging and labeling

• Diversifying suppliers

• All of the above

What is the main purpose of cultural awareness in international business?

• To avoid offending potential customers

• To adapt communication styles effectively

• To comply with local regulations

• All of the above

Which of the following documents is NOT required for most international trade transactions?

• Proforma invoice

• Invoice

• Bill of lading

• 1. Tax return

What is the purpose of a consular invoice?

• To verify the value of goods for customs purposes

• To provide information about the origin of goods

• To track the movement of goods across borders

• To facilitate payment between buyer and seller

What is a key benefit of using a forward contract for currency exchange?

• Locking in an exchange rate

• Minimizing transaction costs

• Speculating on currency movements

• Reducing payment delays

What is a potential downside of selective hedging for foreign exchange risk?

• Increased costs

• Exposure to unhedged transactions

• Difficulty predicting future needs

• All of the above

What is the primary risk associated with using natural hedging for foreign exchange risk?

• Limited control over currency exposure

• Dependence on finding matching transactions

• Potential for significant losses

• High administrative costs