A. DEFINITIONS
Write a brief definition for each of the following; no need
to use complete sentences.
Currency appreciation
Currency devaluation
Exchange rate
Forward rate
Indirect exporting
Spot rate
B. SHORT ANSWER
Answer each question in the space provided. Do not use complete
sentences.
1. What's the difference between currency arbitrage and currency speculation?
2. What are the three functions of a bill of lading, in international
trade?
3. What four parties are named on a confirmed, irrevocable letter of
credit? What does each party do?
4. Define exchange risk (also known as currency risk). List three
ways for an exporter to avoid it.
5. List the five typical sorts of export payment terms, in order of
decreasing favor for the exporter.
C. ESSAYS
Write one brief essay, based on one of the sets of questions below.
1. The International Fisher Effect predicts future changes in the spot
exchange rate between two currencies as a function of the current differential
in the two countries' nominal interest rates (for the same risk level and
maturity of loan). Why is this? (Note: there are several
steps to the explanation).
2. Explain, in some detail, one way to analyze the suitability of a
particular foreign market for a given product (to be exported by a given
company).
3. Imagine two U.S. companies that produce the same product.
One company has been a substantial exporter to Mexico for many years;
it earns a sizable proportion of its revenues and markets from Mexican
sales. The other company has seldom exported anywhere, but has assigned
one person to suggest low-cost ways to pursue some Mexican sales.
Contrast the likely product-adaptation, pricing, and distribution policies
of these two companies, in their Mexican marketing strategies. [This
question may be answered without complete sentences].