21) Why does an international business need to constantly analyse and mitigate its commercial risk?

a.The buyer of your goods or services may not be able to pay.

b.Your suppliers may not be delivering the promised quantities.

c.Your business relationship with suppliers and customers is at risk

d.All of the above

22)To an international business, what is commercial risk?

a.The possibility of not being compensated, per your terms-of-sale

b.The possibility that suppliers do not live up to their commitments.

c.All of the above.

d.None of the above

23) Your engineering company specializes in the design and engineering of hydro-electric dams around the world. As potential dam sites are site specific, it is a global business. The company is considering whether it should bid to design and build a very large hydro-electric dam in Libya. There are significant commercial risks, and you have been asked to investigate them. What should you be considering?

a.The degree of corruption and centralized control over commerce

b.Libya's property rights legal protections and trade restrictions

c.Libya's international reserve position, and ability to pay

d.All of the above

24) Your company is particularly concerned about performance risk, arising from a inadequate knowledge of Libyan suppliers, and an inability to manage them. What should you be considering?

a.The likelihood of labor shortages or construction breakdowns

b.The Libyan business environment as a whole

c.Only a)

d.Both a) and b)

25) Your company is concerned about the Libyan history with terrorist financing. You believe that you will need to research whether Libya is currently under an international sanction of some type.

True

False

26) Your company has talked to other vendors who are doing business in Libya. The degree of financial fraud has been raised as a concern. What should you be researching?

a.The buyer's history of refusing to pay for goods and services provided

b.The buyer's history of providing fraudulent Letter of Credit guarantees

c.The buyer's history of paying with fraudulent cheques

d.All of the above.

27)You know that the degree of financial fraud in Libya has been raised as a concern. If you just research the buyer, that will be enough to address this concern?

True

False

28)Your company has also raised the degree of corruption and bribery in Libya as a concern. What would be signs that corruption is present?

a.The buyer is using normally acceptable Libyan business practices

b.There is no agent involvement in the transaction

c.All of the above

d.None of the above.

29) Your company has been privately advised that to do business in Libya, they will need to use a 'fixer', or agent. What should the company be looking for in an agent?

a.Close family ties with key official figures

b.Wish to remain anonymous

c.Payment via a third party

d.All of the above

30) You realize that you are going to have to recommend a course of action to your company, not just conduct research. What are you going to recommend?

a.Negotiate an understanding with your home government first, before moving forward on doing business in Libya.

b.Organize the project as a government-to-government contract. Your government, sub contracting your engineering company to do the work.

c.Walk away from the Libyan opportunity. It is not worth the commercial risk

d.Recommend either of the above

31)Why does an international business need to analyse and mitigate its economic risk?

a.Target market economies continually change over time.

b.Target market laws and taxation continually change over time.

c.All of the above

d.None of the above

32)To an international business, what is economic risk?

a.The possibility of being adversely affected by changes in foreign exchange

b.The possibility of being adversely affected by changes in local content rules.

c.The possibility of being adversely affected by changes in work permit rules.

d.All of the above

33)Your client, is a Windsor distillery that specializes in the production of luxury brand whisky, fortified ice wines, and various specialized spirits. The distillery produces a number of very well-known global brands, and is a global business. The company is researching whether it should start exporting to Russia, and has asked you to investigate the economic risks. What should you be considering?

a.Russian inflation and employment rates

b.The proportion of Russian export earnings, needed to service its external debt

c.Taxation at the national, regional, and municipal levels

d.All of the above

34) The distillery used to export to the former Soviet Union many years ago, and ceased upon the break-up of the union. The company has asked you to research the Russian economic and financial fundamentals. You anticipate that economic information will be widely available.

True

False

35) The distillery used to export to the former Soviet Union many years ago, and ceased upon the break-up of the union. The company has asked you to research the Russian economic and financial fundamentals. You would MOST LIKELY research?

a.The recent performance of Russian stock and bond markets

b.The structure of Russian financial markets

c.The length and duration of Russian economic cycles over the last 50 years

d.All of the above

36) The distillery is particularly interested in the relevant Russian laws, taxation, and trade agreements. What should you be researching?

a.The existence of any trade agreements

b.Whether local content laws will apply to the exports

c.Whether price ceilings will apply to the products

d.All of the above

37) The distillery anticipates that it will be selling primarily to the Russian government, but has expressed concern about the possibility on non-payment. To adequately address this concern, you would need to develop a risk matrix that assesses each potential sub risk by both probability and severity of impact. Is this?

True

False

38)The distillery plans to make its Russian products locally, under a licencing agreement. What are the advantages and disadvantages of this kind of risk sharing?

a.The local partner can provide ongoing market intelligence

b.The distillery has less capital and financial assets at risk

c.There is a possibility the local partner steals the distilleries trade secrets

d.All of the above

39)The distillery is well versed in exporting to one-party states, and would like you to research the types of financial insurance available. What should you be researching?

a.Foreign funds insurance

b.Contract Frustration Insurance (CIF) Sovereign Buyer

c.None of the above

d.All of the above

40) You realize that you are going to have to recommend a course of action to your company, not just conduct research. What are you going to recommend?

a.Export to Russia from the Windsor distillery.

b.Distill under licence in Russia, and sell to the Russian government directly.

c.Walk away from the Russian opportunity. It is not worth the economic risk

d.Any of the above