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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. b. in-country termination. c. international company terminology. d. intercontinental term standards. e. None of the above

2. In planning their export strategy, companies generally determine which Incoterm they will use on a case-by-case basis. a. True b. 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 b. Exporter c. customs office d. All of the above e. None of the above

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). b. Ex-Works (EXW). c. Delivered Duty Paid (DDP). d. Delivered at Frontier (DAF). e. None of the above

5. The choice of an Incoterm, as well as the choice of the method of payment and of other related transaction alternatives, constitutes an exporters customer service strategy. a. True b. 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. b. a lack of personal contact. d. All of the above e. None of the above

2 c. no easy legal recourse. 7. The greater the exposure, the more secure terms of payment should be. a. True b. False 8. In a letter of credit, the critical element is a. the creditworthiness of the importer. b. the documentation of the transaction. c. the creditworthiness of the exporter. 9. The bill of lading serves as a. a certificate of an open account. b. a substitute for a letter of credit. c. a certificate of title to transported goods. d. All of the above e. None of the above d. the promise of eventually changing to an open account. e. None of the above

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. True b. False 11. If the exporter and the importer agree that a transaction will be in the currency of the exporters country, the exporter then bears all the risks of exchange rate fluctuation. a. True b. 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. b. it is exposed to a certain amount of risk. c. it will use the services of the Ex-Im Bank. d. All of the above e. None of the above

13. One strategy a company can follow to protect itself from currency fluctuations is use of a. a letter of credit. b. risk retention. d. All of the above e. None of the above

3 c. forward market hedges. 14. For an exporter, there is a strategic advantage in quoting prices in the importers currency and discuss with its banker which of the three hedging tactics would be most appropriate. a. True b. 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. True b. 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. True b. False 17. The commercial invoice a. is sent ahead of the shipment. b. is the same thing as a letter of credit. c. is sent with the shipment.
18. Among the reasons for import documents are a. to keep out shoddy goods. b. to determine appropriate tariff classifications. c. to help determine import goods values.

d. All of the above e. None of the above

d. All of the above e. None of the above

19. Besides a contract for carriage and a receipt for goods, the bill of lading is a. a substitute for a Certificate of Insurance. b. a certificate of title c. an Incoterm. d. All of the above e. None of the above

20. EDI is
a. a fax d. All of the above

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b. an email c. an electronic exchange of documents e. None of the above

21. One of the most complex areas of international logistics is international insurance. a. True b. False

22. A typical container will be handled _____ times in each of the ports of departure and destination. a. four to six b. fifteen to twenty c. fifty to sixty d. two to three e. one to two hundred

23. Marine cargo insurance can be purchased from a. a barratry. b. MSC Carla. c. COGSA. 24. Airfreight insurance policies a. are more complicated than ocean d. All of the above marine policies. b. are written as All Risks policies e. None of the above (with exclusions) c. have none of the traditional exclusions of ocean marine policies. 25. A letter of credit often requires a. an open ocean cargo policy. b. a special cargo policy. c. a Certificate of Insurance. d. All of the above e. None of the above d. All of the above e. None of the above