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Review questions Chapter 7 and 8
INT460 Global Logistics Mgmt.
Instructor: Mr. Gary Reinke
Chapter 7 questions.
1. Why is it more difficult and riskier to collect receivables from a foreign purchaser?
2. What are the differences between political risk and commercial risks of non-payment?
3. Describe the concept of cash in advance?
4. Describe the process of documentary collection?
5. Describe the mechanism of a letter of credit, from the exchange of the pro forma invoice to final payment?
6. What is the credit insurance? Why is it associated with open account transactions?
7. Several people claim that letters of credit will soon be replaced by the concept of TradeCard. What is this product, and why do those people think it has such a bright future?
8. Describe the concept of bank guarantees. What are the different types of bank guarantees?
Chapter 8 questions
1. What are three of the possible choices that an exporter can make (in terms of currency) for a specific transaction?
2. Explain the three different types of exchange rates. Find the three exchange rates for a currency of your choice and explain the values you find.
3. Explain three different types of currencies. Give an example of each.
4. Choose two of the theories of exchange rate determination and explain them.
5. What does it mean for a firm to retain its currency fluctuation risk in a transaction?
6. There are three types of hedges that a firm can use to protect itself against transaction exposure. Choose one of them and explain.