Business Correspondence

What is a sight draft?

• A type of financial instrument used in international trade.

• A document that requires payment upon presentation.

• A method of shipping goods by sea.

• A form of insurance for cargo.

What is a bill of exchange?

• A legal document outlining terms of payment between buyer and seller.

• A letter of credit issued by a bank.

• A type of shipping document required for customs clearance.

• A form of insurance for cargo.

What is a letter of credit (LC)?

• A written agreement between buyer and seller.

• A type of insurance policy for goods in transit.

• A document issued by a bank guaranteeing payment to a seller.

• A contract outlining delivery terms for international shipments.

Which term refers to pre-defined shipping terms that specify responsibilities and costs between buyer and seller?

• Letter of credit

• Bill of exchange

• Sight draft

• Incoterms 2020

A sight draft requires payment upon presentation. (True/False)

• True

• False

A bill of exchange is a negotiable instrument that orders the payment of a specific sum of money.

• True

• False

Letters of credit are commonly used to minimize payment risks in domestic trade.

• True

• False

Incoterms 2020 is a set of standardized payment terms published by the International Chamber of Commerce.

• True

• False

What does FCA (Free Carrier) in Incoterms 2020 indicate?

• The seller delivers the goods, cleared for export, to the carrier nominated by the buyer at a named place.

• The seller arranges and pays for transportation to the named place of delivery.

• The seller fulfills their obligation once the goods are made available at their premises.

• The seller delivers the goods, cleared for import, to the buyer's premises.

Under which Incoterms 2020 rule does the seller bear all risks and costs until the goods are delivered on board the vessel at the named port of shipment?

• CFR (Cost and Freight)

• CIF (Cost, Insurance, and Freight)

• DAT (Delivered at Terminal)

• DAP (Delivered at Place)