Unit 4 - done

Export/ import financing in which a bank acts as an intermediary without accepting financial risk is called documentary collection.

• True

• False

A sight draft extends the period of time following delivery by which the importer must pay for the goods.

• True

• False

A revocable letter of credit allows the bank issuing the letter to modify the terms of the letter only after obtaining the approval of both exporter and importer

• True

• False

A confirmed letter of credit is guaranteed by both the exporter's bank in the country of export and the importer's bank in the country of import

• True

• False

The advance payment method reduces the risk of non-shipment that the importer faces under the open account method

• True

• False

Which of these financing methods comprises the highest risk for importers?

• Documentary collection

• Advance payment

• Letter of credit

• Open account

Which of these financing methods comprises the highest risk for exporters?

• Documentary collection

• Advance payment

• Letter of credit

• Open account

A document ordering the importer to pay the exporter a specified sum of money at a specified time is called a(n)

• bill of lading

• letter of credit

• bill of exchange

• airway bill

Which of these requires the importer to pay when goods are delivered?

• A sight draft

• A bill of lading

• A time draft

• An air way bill

A contract between the exporter and carrier that specifies destination and shipping costs of the merchandise is called a(n)

• draft

• bill of lading

• letter of credit

• bill of exchange