International Trade and Risks Quiz
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International Trade and Risks Quiz

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Questions and Answers

What best describes credit risk in international trade?

  • The risk of obtaining payment from a trading partner. (correct)
  • The risk of price changes in the market.
  • The risk of receiving damaged goods.
  • The risk of fluctuating exchange rates.

    • Which type of risk involves fluctuations in exchange rates over time?

  • Market Risk
  • Exchange Risk (correct)
  • Credit Risk
  • Mercantile Risk

    • What is mercantile risk in the context of international trade?

  • The risk of loss due to unexpected market price changes.
  • The risk associated with the receipt of goods not meeting quality standards. (correct)
  • The risk of a buyer failing to pay for goods ordered.
  • The risk of changes in customs regulations affecting shipments.

    • Which of the following risks is NOT a component of international trade risks?

    <p>Operational Risk</p> Signup and view all the answers

    What is the main consequence of the time lapse in international trade transactions?

    <p>Fluctuations in market prices and exchange rates.</p> Signup and view all the answers

    What is the primary purpose of the United Nations Convention on Contract for the International Sales of Goods (CISG)?

    <p>To serve as a reference rule for contracts between sellers and buyers</p> Signup and view all the answers

    What do INCOTERMS refer to in the context of international trade?

    <p>Pre-defined commercial terms for international contracts</p> Signup and view all the answers

    Which of the following sets of rules pertains specifically to air transport?

    <p>Warsaw Convention</p> Signup and view all the answers

    Which convention relates to rules governing combined transport documents?

    <p>Unified Rules for a Combined Transport Document</p> Signup and view all the answers

    What is the primary concern of the Marine Insurance Acts (1968)?

    <p>Providing a framework for insurance contracts in marine trade</p> Signup and view all the answers

    What do the Uniform Customs and Practices for Documentary Credits (UCP 600) primarily address?

    <p>Standards for documentary credit practices in trade transactions</p> Signup and view all the answers

    Which of the following was established specifically in 1968 to modernize existing maritime transport rules?

    <p>Hague-Visby Rules</p> Signup and view all the answers

    Which of the following represents key terms related to the interpretation of trade terms?

    <p>INCOTERMS</p> Signup and view all the answers

    What color is associated with good luck in Chinese culture?

    <p>Red</p> Signup and view all the answers

    What is the primary consideration when selecting target items for export?

    <p>Price, quality, usage, design</p> Signup and view all the answers

    In the hierarchy of relationships in China, who is likely to be seen above extended family?

    <p>Family</p> Signup and view all the answers

    Which phase involves assessing whether a market is fully opened or not?

    <p>Market Opening Phase</p> Signup and view all the answers

    Which date is noted for its significance in Chinese culture due to the number 8?

    <p>August 8</p> Signup and view all the answers

    In the process of international trade, what step comes immediately after selecting trading partners?

    <p>Negotiation and Acceptance of Trade Terms &amp; Conditions</p> Signup and view all the answers

    Which color is often associated with misfortune in Chinese culture?

    <p>Black</p> Signup and view all the answers

    What term best describes the highest tier in the Indian caste system?

    <p>Brahmins</p> Signup and view all the answers

    What is a secondary consideration when evaluating goods for export?

    <p>Comparative Advantage &amp; Disadvantage</p> Signup and view all the answers

    Which of the following best describes the 'Mature' phase in market demand?

    <p>Stable sales with market saturation</p> Signup and view all the answers

    Which of the following emotions is NOT commonly associated with the color yellow in Chinese culture?

    <p>Misfortune</p> Signup and view all the answers

    What is the common perception of 'Strangers' in the hierarchy of relationships in China?

    <p>They have the lowest status compared to familial connections.</p> Signup and view all the answers

    What consideration reflects the likelihood of competition in the market?

    <p>Competitive Elements</p> Signup and view all the answers

    In which situation is government interference likely to be strongest?

    <p>Unopened market</p> Signup and view all the answers

    Which characteristic is NOT associated with the color jade green in Chinese symbolism?

    <p>Poor luck</p> Signup and view all the answers

    Which factor is least likely to be considered when selecting a target market for exports?

    <p>Historical Trade Relations</p> Signup and view all the answers

    Which of the following is NOT a source of market research information?

    <p>Sourcing Directory</p> Signup and view all the answers

    What is a method to conduct import/export marketing?

    <p>Trade Portal Registration</p> Signup and view all the answers

    Which of the following activities is associated with discovering trading partners?

    <p>E-mail Communication</p> Signup and view all the answers

    What is a common tool used for credit investigation?

    <p>Financial Statements</p> Signup and view all the answers

    Which of the following is a channel for import/export marketing that involves direct interaction?

    <p>Participate in the Exhibition</p> Signup and view all the answers

    Which organization can assist in gaining consumption information by product?

    <p>Chamber of Commerce</p> Signup and view all the answers

    What type of report helps analyze purchase trends?

    <p>Purchase Trend Report</p> Signup and view all the answers

    What is a function of a Credit Information Agency in the international trade process?

    <p>Providing Credit Surveys</p> Signup and view all the answers

    Study Notes

    International Trade

    • International trade is the exchange of goods and services across international borders.
    • It is carried out by firms, individuals, and governments.
    • International trade is a complex process, with many risks and challenges.

    Risks of International Trade

    • Transactions between strangers in different countries can lead to higher risk.
    • Trade requires time to complete, which increases risk factors.
    • Credit risk is the risk of not receiving payment.
    • Mercantile risk is the risk of not receiving the goods.
    • Exchange rate risk is the risk of losing money due to currency fluctuations during the trade process.
    • Market risk is the risk of prices fluctuating during the trade process, potentially affecting the value of the goods.

    International Trade Law

    • CISG (United Nations Convention on Contract for the International Sales of Goods): Provides a universal set of rules for buying and selling goods across borders.
    • INCOTERMS (International Rules for the Interpretation of Trade Terms): Defines commonly used terms for international trade contracts, such as FOB (Free On Board) and CIF (Cost, Insurance, and Freight).
    • Hague Rules and Hague-Visby Rules: Regulate carriage of goods by sea.
    • Warsaw Convention: Regulates carriage of goods by air.
    • Marine Insurance Acts and Institute Cargo Clauses (ICC): Cover insurance contracts for goods transported by sea.
    • Uniform Rules for Collection and UCP (Uniform Customs and Practices for Documentary Credits): Provide rules for collecting payments and using documentary credits.

    International Trade Process

    • Step 1: Item Selection & Overseas Market Research: Determine the most promising products and markets for international trade.
      • Analyze product factors including price, quality, usage, design, and major consumer.
      • Identify potential markets based on market demand, economic development, market opening, competitive environment, government interference, and cultural considerations.
    • Step 2: Import / Export Marketing: Create awareness and promote goods and services in overseas markets.
      • Use trade portals, websites, blogs, online ads, exhibitions, and personal visits to reach target customers.
    • Step 3: Discovery of Trading Partners & Credit Investigation: Find reliable and trustworthy partners.
      • Use search engines, emails, faxes, exhibitions, credit reports, and financial statements to identify potential partners.
    • Step 4: Negotiation and Acceptance of Trade Terms & Conditions: Discuss and agree on the terms of the trade contract.
    • Step 5: Sign a Trade Contract: Formally bind both parties to the agreed-upon terms.
    • Step 6: Issuing & Accepting of L/C (Letter of Credit): Secure payment for the goods by using a letter of credit from a bank.
    • Step 7: Selection of Transportation Company & Sign an Insurance Contract: Choose a reliable transportation company to ship the goods and obtain insurance to protect against potential losses.
    • Step 8: Import / Export Customs Clearance and Payment & Acceptance: Complete customs procedures and handle payments for the goods.
    • Step 9: Claim & Arbitration: Resolve any disputes that may arise during the trade process.

    Market Research Techniques

    • Trade Statistics
    • Consumption Information by Product
    • Market Research Reports
    • Business Trips & Field Surveys
    • Purchase Trend Reports
    • Trade Associations
    • Chambers of Commerce
    • Trade-related Organizations
    • Trade Portals
    • Economic Publications

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    Related Documents

    IUT_SBL 2024 Fall Trade Business PDF

    Description

    Test your knowledge on international trade, its complexities, and the various risks involved. This quiz also covers important legal frameworks such as the CISG and the implications of international buying and selling. Assess your understanding of how international transactions function and their potential challenges.

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