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LMGT 2330-7426 2012S1, International Logistics Management. Exam 2 (100 pts; 4 pts per question); Please download, select and highlight (bold font is fine) the best answer to multiple choice questions, enter letter of best response to matching questions and select/highlight or enter best response to fill-in questions, save, attach as email, and return to me by email, tharrington@dcccd.edu , not later than 11:55 p.m. Saturday, June 16, 2012.

1. Incoterms stands for

a. terminal incorporation procedures. d. intercontinental term standards.b. in-country termination. e. None of the abovec. international company terminology.

2. In planning their export strategy, companies generally determine which Incoterm they will use on a case-by-case basis.

a. Trueb. False

3. While on the surface Incoterms determine who pays what when, ultimately the _____ directly or indirectly pay(s) the costs of transportation and international shipping.

a. Importer d. All of the aboveb. Exporter e. None of the abovec. customs office

4. In terms of cost and responsibility, the easiest Incoterm for the exporter which is, in turn, the most difficult for the importer is

a. Delivered Duty Unpaid (DDU). d. Delivered at Frontier (DAF).b. Ex-Works (EXW). e. None of the abovec. Delivered Duty Paid (DDP).

5. The choice of an Incoterm, as well as the choice of the method of payment and of other related transaction alternatives, constitutes an exporter’s customer service strategy.

a. Trueb. False

6. Among other reasons, international transactions are perceived to have more risk of non-payment because of which of the following characteristics of international payment issues

a. a lack of credit information. d. All of the aboveb. a lack of personal contact. e. None of the abovec. no easy legal recourse.

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7. The greater the exposure, the more secure terms of payment should be.

a. Trueb. False

8. In a letter of credit, the critical element is

a. the creditworthiness of the importer. d. the promise of eventually changing to an open account.

b. the documentation of the transaction. e. None of the abovec. the creditworthiness of the exporter.

9. The bill of lading serves as

a. a certificate of an open account. d. All of the aboveb. a substitute for a letter of credit. e. None of the abovec. a certificate of title to transported goods.

10. If an exporter is intent on making a sale to an importer as a marketing tool but is unsure about the ability of the importer to pay, the exporter should consider purchasing a credit insurance policy.

a. Trueb. False

11. If the exporter and the importer agree that a transaction will be in the currency of the exporter’s country, the exporter then bears all the risks of exchange rate fluctuation.

a. Trueb. False

12. When a company is engaged in an international transaction and agrees to use a foreign currency to conduct the transaction

a. it will use an SDR. d. All of the aboveb. it is exposed to a certain amount of risk. e. None of the abovec. it will use the services of the Ex-Im Bank.

13. One strategy a company can follow to protect itself from currency fluctuations is use of

a. a letter of credit. d. All of the aboveb. risk retention. e. None of the abovec. forward market hedges.

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14. For an exporter, there is a strategic advantage in quoting prices in the importer’s currency and discuss with its banker which of the three hedging tactics would be most appropriate.

a. Trueb. False

15. For each international sale, the exporter and the importer must agree on the terms of trade and the terms of sale, and consider the currency under which the transaction will take place.

a. Trueb. False

16. Because the responsibility of proper document preparation falls mostly on the exporter, regardless of the Incoterm used, an exporter can turn its ability to do a good and thorough job in this aspect of international logistics into a marketing advantage.

a. Trueb. False

17. The commercial invoice

a. is sent ahead of the shipment. d. All of the aboveb. is the same thing as a letter of credit. e. None of the abovec. is sent with the shipment.

18. Among the reasons for import documents area. to keep out shoddy goods. d. All of the aboveb. to determine appropriate tariff

classifications.e. None of the above

c. to help determine import goods values.

19. Besides a contract for carriage and a receipt for goods, the bill of lading is

a. a substitute for a Certificate of Insurance. d. All of the aboveb. a certificate of title e. None of the abovec. an Incoterm.

20. EDI is

a. a fax d. All of the aboveb. an email e. None of the abovec. an electronic exchange of documents

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21. One of the most complex areas of international logistics is international insurance.

a. Trueb. False

22. A typical container will be handled _____ times in each of the ports of departure and destination.

a. four to six d. two to threeb. fifteen to twenty e. one to two hundredc. fifty to sixty

23. Marine cargo insurance can be purchased from

a. a barratry. d. All of the aboveb. MSC Carla. e. None of the abovec. COGSA.

24. Airfreight insurance policies

a. are more complicated than ocean marine policies.

d. All of the above

b. are written as “All Risks” policies (with exclusions)

e. None of the above

c. have none of the traditional exclusions of ocean marine policies.

25. A letter of credit often requires

a. an open ocean cargo policy. d. All of the aboveb. a special cargo policy. e. None of the abovec. a Certificate of Insurance.