1. Trade Finance and Payment Methods May 9 th, 2013 Presented by: Berenice Carmona Jaime Martinez International Trade Center

2. CGBP Finance 1. The term, “Clean” Bill of Lading indicates which of the following? a. The carrier has indicated that the merchandise has been received in apparent good condition and no shortages have been noted

3. CGBP Finance 2. Import tariffs are normally assessed on the following basis: a. C.I.F. basis (Cost + Insurance + Freight to the port of entry)

4. CGBP Finance 3. Landed cost includes which of the following set of costs: d. The cost of goods and all the vost of getting a product from the US exporter’s facility to the facility of the foreign buyer

5. CGBP Finance 4. The major benefit of using export credit insurance is to: c. A and B a. Increase a company’s chance of obtaining a sale by lowering the risk associated with offering open account terms or extended payment periods b. Protect the company against non-payment by a foreign customer or in the case of non-payment due to political risk

6. CGBP Finance 5. EX-Im Bank’s Export Credit Insurance is available for U.S. Exports for: d. B and C b. U.S. exports to countries indicated as eligible on the Country Limitation Schedule c. Sales to foreign buyers that meet EX-IM Bank’s credit standards

7. CGBP Finance 6. Public International Company Profile is which of the following? b. A detailed report on a foreign company prepared on a custom basis by the U.S. Foreign Commercial Service

8. CGBP Finance 7. The risk of not receiving payment due to Political risk can be minimized by using which of the following: e. All of the above a. A confirmed, irrevocable letter of credit b. Cash in Advance c. Export Credit Insurance d. Establish a credit limit for the country consistent with company risk capabilities

9. CGBP Finance 8. A disadvantage of U.S. exporter using only dollar-based exporting is that: d. All of the above a. Transfers the foreign exchange risk to the buyer b. May result in losing sales opportunities c. Risk of payment delays

10. CGBP Finance 9. Netting is another foreign risk exchange management tool wherein: a. A company matches a foreign receivable payment with a foreign liability in the same currency to offset each risk

11. CGBP Finance 10.A binding agreement to purchase or to sell a specific amount of a currency in return for a fixed amount of another currency at a specific date in the future is known as a: b. Forward contract

12. CGBP Finance 11. A U.S. exporter has sold four printing presses to a newspaper in South Africa for 610,000 Rand, payable in 90 days. The exporter is uncertain about the future value of the Rand against the dollar and fears it might be converted at a lower dollar value than anticipated at the time of sale. The best option is to: a. Buy a 90 day forward contract to sell 610,000 Rands against the dollar

13. CGBP Finance 12. The previous question is an example of what kind of risk? b. Currency transaction risk

14. CGBP Finance 13. An Advising Bank is the bank in a letter of credit cycle which: d. B and C b. Is a bank in the beneficiary’s country that receives a letter of credit or its amendments and forwards it to the beneficiary c. Advises the beneficiary as to the validity of the letter of credit

15. CGBP Finance 14. The Confirming Bank is responsible for the following: a. Guarantying the letter of credit and payment by the issuing bank

16. CGBP Finance 15. Which of the following are characteristic of the Collecting Bank? e. A,B and C a. Located in the importers country b. Responsible for processing the collection of L/C funds for transfer c. It is also often the issuing bank

17. CGBP Finance 16. An irrevocable letter of credit can be cancelled or amended only if: c. Both the applicant and the beneficiary must mutually agree to cancel or amend the letter of credit

18. CGBP Finance 17. A letter of credit is not in compliance and may not be paid if: e. All of the above a. The beneficiary misses the shipping date stated in the L/C b. The L/C specifies all documents list the L/C number, but the packing list does not have it c. Partial shipment is made, unless allowed by the L/C d. The address for the applicant in the L/C is “P.O. Box 433”, but the commercial invoice has “Post Box 433”

19. CGBP Finance 18. A clean bank draft is one in which: b. The bank draft that is not accompanied by shipping or any other documents

20. CGBP Finance 19. A major risk for the seller associated with Sight Drafts is that: a. The buyer does not have to accept the documents from the bank

21. CGBP Finance 20. A Time Draft or Documents Against Acceptance allows the buyer to make payment at a specified future date through a bank draft. Possible risks include: d. A and B a. No money in the account to be drafted at the specified date b. Buyer already has the goods in return for buyer’s future agreement to pay

22. CGBP Finance 21. A company exports to a related party in another country and charges a lower rate than the one used for unrelated parties. The issue of concern would be: d. Transfer pricing

23. CGBP Finance 22. With regard to degree of risk to the exporter, which of the following lists correctly ranks payment methods from lowest to highest? c. Cash in advance, letter of credit, collection at sight, open account

24. CGBP Finance 23. In examining a buyer’s credit risk, what sources can provide credit information? e. All the above a. Banks b. US Foreign Commercial Service c. Credit Reports d. Industry Contacts

25. CGBP Finance 24. Which of the following is the most common reason for nonpayment of export transactions? b. Buyer bankruptcy or insolvency

26. CGBP Finance 25. The US SBA provides: a. Export working capital guarantees

27. Questions and Answers International Trade Center 501 W Durango Boulevard, 4th Fl. San Antonio, Texas 78207 T: 210.458.2470 www.texastrade.org INTERNATIONAL TRADE CENTER