Download International Payment | IP11 Exam Practice Test: L/Cs and Guarantees and more Exercises International Finance and Trade in PDF only on Docsity!
International Payment | IP
Exam Practice Test: L/Cs and Guarantees
Question 01: In international trade, who is the party requesting the use of the wire transfer payment method a. Importer b. Exporter c. Importer's bank d. Exporter's bank Question 02: What is the deadline for the delivery of goods in the Back-to-Back L/C compared to the original L/C? a. Before b. After c. On the same day d. Depending on the choice of the delivering party Question 03: In international commercial processing, which type of L/C can the parties apply? a. Irrevocable credit b. Confirmed credit c. Reciprocal credit d. Red clause credit Question 04: Who benefits from the payment guarantee for imported goods (XNK)? a. Importer b. Exporter c. Importer's bank d. Exporter's bank Question 05: The set of international commercial documents is prepared at the request of whom? a. Exporter b. Importer c. Exporter's bank d. Importer's bank
Question 06: Who is the party signing and issuing the Letter of Credit (L/C)? a. Exporter b. Notifying bank c. Beneficiary d. Authorized bank Question 07: Who benefits from a confirmed Letter of Credit (L/C)? a. Importer b. Exporter c. Issuing bank d. Notifying bank Question 08: Who is responsible for payment to the beneficiary in a Letter of Credit (L/C)? a. Importer b. Issuing bank c. Notifying bank Question 09: If the Exporter does not deliver the goods but presents documents complying with the L/C terms, how does the Issuing bank handle it? a. Still make the payment b. Do not make the payment c. Make a 50% payment d. Subject to the decision of the Issuing bank Question 10: What is the required date for presenting documents in a Letter of Credit (L/C) payment? a. Before or on the same day of delivery b. On the same day of delivery c. After the day of delivery d. Before or on the same day of L/C expiration Question 11: In CIF delivery terms on the Bill of Lading, how should the freight cost be indicated? a. Freight to collect
● Answer: C - Explanation: In international commercial processing, parties can apply "Reciprocal credit" , where the corresponding credit becomes effective when the original L/C it corresponds to is opened. This type is used in countertrade. Question 04: ● Answer: B - Explanation: The party benefiting from the payment guarantee for imported goods is the Exporter because it ensures the Exporter receives payment, reducing the payment risk. Question 05: ● Answer: B - Explanation: The set of international commercial documents is prepared at the request of the Importer as it serves as a basis for the Importer to verify the conformity of goods received and resolve disputes if they arise. Question 06: ● Answer: C - Explanation: The party signing and issuing the Letter of Credit (L/C) is the Beneficiary, as they are the party to whom the L/C is addressed, and they have to present compliant documents to receive payment. Question 07: ● Answer: B - Explanation: The party benefiting from a confirmed Letter of Credit (L/C) is the Exporter because it reduces the risk of payment as the confirming bank adds its confirmation to the credit, assuring payment. Question 08: ● Answer: B - Explanation: The party responsible for payment to the beneficiary in a Letter of Credit (L/C) is the Issuing bank as it is the bank that opened the L/C and undertakes the obligation to pay the beneficiary upon presentation of compliant documents. Question 09: ● Answer: A - Explanation: The Issuing bank will still make the payment if the Exporter presents documents complying with the L/C terms, even if the goods are not delivered. Question 10:
● Answer: C - Explanation: The required date for presenting documents in a Letter of Credit (L/C) payment is "After the day of delivery" ,as the documents are typically prepared after the goods have been delivered. Question 11: ● Answer: C - Explanation: In CIF delivery terms on the Bill of Lading, the correct indication for the freight cost is "Freight prepaid", meaning the freight cost has been paid in advance. Question 12: ● Answer: A - Explanation: When using a Revolving L/C, the Importer benefits. A Revolving L/C can be used repeatedly within a specified period, providing flexibility and avoiding delays. Question 13: ● Answer: B - Explanation: The statement is "False." A Confirmed L/C benefits the Exporter as it provides an additional guarantee of payment, especially when dealing with banks in countries with a higher risk of default. Question 14: ● Answer: A - Explanation: "Reciprocal credit" is used in the case of Barter trade and international countertrade methods. It ensures that the corresponding L/C becomes effective when the original L/C it corresponds to is opened.
