Which of the Following Is True About Free Trade Zones

question 9

Multiple Choice

Which of the following is true about free trade zones (FTZs) ?

• A) In an FTZ, payment of import duties is postponed until the product leaves the FTZ area and enters the country.
• B) More than 500 FTZs operate throughout the world, processing imported goods.
• C) An FTZ is, in essence, a taxable enclave and considered part of the country as far as import regulations are concerned.
• D) When an item leaves an FTZ and is imported officially into the home country of the FTZ, all duties and regulations are imposed.
• E) Utilizing FTZs typically control price escalation resulting from the layers of taxes, duties, surcharges, and freight charges.

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Definitions:

Market Risk

The risk of losses in investments due to factors that affect the overall performance of financial markets.

High Water Mark

A clause in fund management contracts that prevents fund managers from receiving large bonuses for poor performance, ensuring they only earn a performance fee when the fund's value exceeds its previous highest value.

Incentive Fees

Fees paid to a fund manager based on performance, often as a percentage of the investment gains beyond a specified benchmark.

Hedge Fund Manager

An individual or firm responsible for making investment decisions in a hedge fund to maximize returns and minimize risks.