FOREIGN TRADE FINANCING

1. Which financial instrument provides a guarantee from a bank to pay the exporter once the specified conditions are met?

• a) Bank loan

• b) Letter of Credit (LC)

• c) Trade credit insurance

• d) Forfaiting

1. In trade finance, what role does the exporter’s bank play in a documentary collection?

• a) It issues a Letter of Credit to the importer

• b) It provides export financing to the exporter

• c) It acts as an intermediary to collect payment from the importer’s bank

• d) It purchases the exporter’s accounts receivable

What does trade finance refer to?

• a) Financial instruments for international trade transactions

• b) Financial transactions within a country

• c) Financial aid for small businesses

• d) Personal savings and investments

1. Which type of trade finance instrument allows exporters to sell their accounts receivable to a third-party financial institution without recourse to the exporter?

• a) Export Financing

• b) Export Credit Insurance

• c) Forfaiting

• d) Factoring

1. What type of financing assists importers in funding their purchases and managing cash flow?

• a) Warehouse Receipt Financing

• b) Forfaiting

• c) Import Financing

• d) Factoring

1. Which trade finance instrument allows traders to obtain loans using warehouse receipts as collateral for the stored goods?

• a) Export Credit

• b) Bank Guarantee

• c) Trade Credit Insurance

• d) Warehouse Receipt Financing

1. What is the process of selling accounts receivable to a third-party financial institution at a discount called?

• a) Forfaiting

• b) Bank Guarantee

• c) Factoring

• d) Trade Credit Insurance

1. Trade finance services often involve currency exchange and hedging products to mitigate the risks associated with:

• a) Fluctuating exchange rates

• b) Regulatory changes

• c) Market competition

• d) Technological advancements

1. Which trade finance product provides coverage for losses arising from buyer defaults, insolvency, or protracted default?

• a) Bank Guarantee

• b) Trade Credit Insurance

• c) Letter of Credit (LC)

• d) Forfaiting

1. Which trade finance product involves the sale of short-term trade receivables, such as invoices, to a financial institution at a discount to accelerate cash flow?

• a) Factoring

• b) Trade Credit Insurance

• c) Forfaiting

• d) Export Financing