International Trade Payment Quiz

Why is export payment essential in international trade?

• Exporter takes a decision to lend funds to the importer.

• Importer sends funds through multiple channels.

• Exporter takes a decision to transfer owned or borrowed money to the buyer.

• Importer guarantees the quality of goods.

What is a primary risk involved in international trade payments?

• Commercial risk of timely delivery.

• Political risk of the importer's country.

• Non-compliance with local regulations.

• Interest rate fluctuation.

Which of the following is considered the safest payment method for the exporter?

• Open Sale Account

• Consignment Sale

• Advance Payment

• Bank Collection Method

What must an exporter do when using a payment method other than SWIFT?

• Ship goods only after receiving payment.

• Ship goods before receiving payment.

• Only deal with large corporations.

• Avoid the use of credit cards.

What is the main role of a negotiating bank in a letter of credit?

• To issue the letter of credit.

• To collect payment from the importer.

• To present the documents required for the exporter to receive payment.

• To handle discrepancies in the shipping documents.

Under what condition can an exporter pay interest up to LIBOR + 2% on advance payments?

• When the importer insists on a higher rate.

• If the export deal is under international arbitration.

• When the importer demands interest on the advanced amount.

• Only for new exporters.

What method is best for managing the political and commercial risks involved in international trade?

• Open Sale Account Method

• Insurance from private firms

• Obtaining ECGC (Export Credit Guarantee Corporation) policy

• Accepting only advance payments

Which document should the exporter prepare to comply with the terms of a letter of credit?

• A sales contract.

• Shipping documents.

• Bank statement.

• Memorandum of understanding.

In the bank collection method, when does the exporter receive payment?

• After the shipment of goods.

• Once the importer accepts the goods.

• Once the importer pays the bank.

• After the export order is completed.

What is a major disadvantage of insisting on advance payment?

• The importer may cancel the order.

• It is unsafe for the exporter.

• The exporter may lose customers to competitors offering better credit facilities.

• The exporter may have to return the payment.