FTFD

Which of the following best describes the role of trade finance in international trade?

• Facilitates currency exchange

• Bridges the gap between shipment and payment

• Provides transportation logistics

• Ensures domestic trade regulation compliance

In a typical international trade finance flow, who issues the Letter of Credit?

• Exporter’s Bank

• Exporter

• Importer

• Importer's Bank

Under a sight Letter of Credit, when is the exporter paid?

• After goods are sold by the importer

• After shipment

• Immediately upon document compliance

• After 90 days

What is the main difference between DP (Documents against Payment) and DA (Documents against Acceptance)?

• In DP, documents are released only after full payment is made

• In DA, documents are released before payment

• In DP, payment is made on credit terms

• Both A and B

What is the key risk associated with an Open Account transaction for the exporter?

• Risk of foreign exchange loss

• Non-payment due to no bank intermediation

• Delay in customs clearance

• Higher insurance costs

Which of the following is not a commonly required document under a Letter of Credit?

• Certificate of Incorporation

• Packing list

• Bill of Lading

• Insurance Policy

What happens if submitted documents contain minor discrepancies under an LC?

• Bank offers grace period

• Bank rejects payment

• Bank pays only partial amount

• Exporter can self-certify the correction

Under the method of Advance Against Export Bills Sent on Collection, which of the following statements is most accurate?

• The exporter sells the bill to the bank and transfers credit risk

• The bank provides an unsecured loan against the export invoice

• The advance is granted only after the importer makes partial payment

• The exporter retains ownership of the bill and bears the risk of buyer default

What is the benefit of trade finance being transaction-based rather than balance sheet-based?

• Loans can be repaid faster

• Even small firms can access large financing

• Exporters get lower interest rates

• Only profit making entities can apply

Which export finance instrument helps the exporter get a loan based on incentives like Duty Drawback or RoDTEP?

• Advance against export on consignment

• Export factoring

• Advance against government receivables

• Advance against Customs and other levies