CPM Global Sourcing and International Procurement 2

Question 1

When managing currency risk in international procurement, a purchasing manager uses a forward contract primarily to:

Accepted Answer

Lock in an exchange rate today for a transaction that will occur in the future

Answer

Speculate on favorable currency movements to reduce cost

Answer

Convert foreign currency to U.S. dollars at the spot rate

Answer

Eliminate the need for foreign currency transactions entirely

Question 2

Which payment term is generally considered least risky for the U.S. buyer when purchasing from a new international supplier?

Accepted Answer

Open Account (Net 30)

Answer

Advance Payment (Cash in Advance)

Answer

Documentary Collection (Documents Against Payment)

Answer

Confirmed Irrevocable Letter of Credit

Question 3

A Certificate of Origin in international trade is used to:

Accepted Answer

Establish the country where goods were manufactured to determine applicable tariff rates

Answer

Certify that a product meets the quality standards of the exporting country

Answer

Authorize a foreign supplier to export goods to the United States

Answer

Document the chain of custody of goods during international shipping

Question 4

When evaluating a foreign supplier's total cost, which factor related to lead time should a procurement manager consider beyond the quoted price?

Accepted Answer

Inventory carrying costs associated with longer international lead times

Answer

The supplier's annual revenue and financial stability

Answer

The foreign government's tax rates on corporate profits

Answer

The supplier's domestic market share in their home country

Question 5

Which organization sets the internationally recognized Incoterms rules used in global trade contracts?

Accepted Answer

International Chamber of Commerce (ICC)

Answer

World Trade Organization (WTO)

Answer

United Nations Commission on International Trade Law (UNCITRAL)

Answer

International Monetary Fund (IMF)

Question 6

A U.S. company importing goods from China receives a notice that an anti-dumping duty has been imposed. This means:

Accepted Answer

Chinese goods are being sold in the U.S. below fair market value, harming domestic producers

Answer

The goods were found to contain hazardous materials

Answer

The importer failed to properly declare the value of goods at customs

Answer

China has restricted exports of those goods, making them scarce in the U.S.

Question 7

In international procurement, 'country risk' assessment evaluates:

Accepted Answer

Political, economic, legal, and operational risks associated with sourcing from a particular country

Answer

Only the supplier's financial ability to fulfill contracts

Answer

The risk that goods will be damaged during international transit

Answer

The likelihood that exchange rates will move unfavorably