13.3: Eporting and Importing Finance Flashcards
What is the main problem in international trade that financial devices such as letters of credit and drafts are meant to solve?
The main problem these financial devices aim to solve is the lack of trust when one must put faith in a stranger, particularly in the context of international trade.
What is the letter of credit?
A letter of credit is a financial document provided by a third party – usually a bank – that guarantees payment for goods or services according to the terms agreed upon by the buyer and seller.
What role does the Business Development Bank of Canada (BDC) play for Canadian businesses?
The BDC provides financing, venture capital, and consulting services to small and medium-sized enterprises in Canada, with a focus on businesses involved in exporting, particularly in the technology sector.
When was the BDC formed and under what act?
The BDC was formed on July 13, 1995, under the Business Development Bank of Canada Act.
What were the origins of the BDC?
The BDC was conceived at the end of World War II era with the creation of the Industrial Development Bank of Canada (IDB) by the Canadian Parliament in September 1944.
What services are provided by the BDC?
The BDC’s services include financing for new equipment, commercial real estate, purchasing existing businesses, working capital, start-up financing, equity, and commercial loans for high potential cleantech firms.
What is a draft or bill of exchange in international trade?
A draft or bill of exchange is a written order used in international trade by which the person writing it instructs another party to pay a specified sum to a third party at a specified future date.
What is a bill of lading?
A bill of lading is a legal document between a shipper and carrier detailing the type, quantity, and destination of the goods being carried.
It also serves as a shipment receipt when the carrier delivers the goods at the predetermined destination.
