1. What are the set of assumptions with which a price quotation is based?

Mode of payment, timing, place of payment

Delay in payment and results of delay

Choices of method of payment

Delivery, payment and warranty terms

2. Which term or terms in a contract could raise the contract price

A shorter warranty period

Customers order goods in one color

No additional packaging or safety warnings are required beyond normal standards

A longer warranty period

3. What would be the effect on the price of the goods traded if the buyer wants the
goods sooner?

The price of the goods will go up

The price of the goods will go down

There is no change in price

The price of the goods will go up as extra costs involved due to extra working shift from
the manufacturer

4. The things that the exporter should keep in mind in negotiating payment are …

Payment mode, timing, place, delay, and results of delay

How payment will be made and the date of payment

Where the money must be before payment is considered complete and what delay in
payment is excusable

Results of non-excusable delay in payment and time of payment expensive

5. In international trade, if payment is made on delivery, the method of payment to

Open account

Export credit insurance

At sight letter of credit

6. A bank guarantee which gives the exporter an acceptable level of security in terms
of payment shall be paid by … 🡪 the Importer/the Buyer

7. Export credit insurance which gives the exporter an acceptable level of security in
terms of payment shall be paid by … 🡪 the Exporter

8. Who issues a bank guarantee? 🡪 the Bank

9. Who issues export credit insurance? insurance company

10. To avoid the dangers of slow payment, exporters try to protect themselves with a
clause like this: “Payment shall be deemed to have been made only when…”

The buyer instructs the bank to pay

The buyer pays the money into his bank

The buyer’s bank transfers funds

Funds reach the seller’s bank account and at his full disposal

11. The method of payment which is dangerous for the exporter is

Cash on delivery

Accepting a personal check

Prepayment

Export credit insurance

12. What do export insurance premiums depend on?

Type of goods exported

Creditworthiness of the buyer

The political stability of the buyer’s country

13. Bank guarantee means ...

A bond

A surety

A warranty

A triangle relationship amongst guarantor, principal, and beneficiary

14. A payment guarantee simply commits the bank to pay if the buyer defaults. The
payment guarantee is usually for ..100%.. of the contract price

15. In a performance guarantee, if the seller works badly or not at all, the guarantor will
pay the buyer, within stated limits

100% of the loss of the beneficiary

The costs of the principal’s failure to perform

The whole contract price

Between 5% and 10% of the contract price

19. D
20. The buyer
21. A price and payment clause taken from an export contract is as follows:
“The price payable for the Contract Goods as specified in Annex A is $500,000.” What is
missing?
The clause does not specify how payment will be made
The clause does not specify when payment is due
The clause lacks all the necesssary five steps in negotiating payment like payment mode,
time, place, delay and results of delay.
The clause does not say where the money must be before the buyer is deemed to have
paid, define delay in payment and mention the consequences of delay.
22. Export credit insurance is very attractive; however, it has certain limitations like
….
High premiums paid by the exporter
Long time waiting for compensation from the insurance company
Long time since the buyerr fails to pay up to the time the insurance company
compensates the exporter and the inability of covering 100% of the orginal invoice price.
Refusal from the insurance company to quote premiums due to risky business or the
buyer’s non-creditworthiness.
23. After making the shipment of the goods to the buyer, the exporter presents the
shipping documents to Advising Bank
24. Why letters of credit are formally called “documentary credits”?
Because a letter of credit is a binding agreement by a bank to pay a certain sum of money
when the exporter presents the necessary documents to the bank
Because the letter of credit is issues …
Because in a L/C situation, documents are exchanged for money
Because the documents in a L/C are proofs of trust.
25. The advising bank never pays the exporter directly. 🡪 It depends on the type of credit
26. There is no connection between the L/C and the sales contract.
Completely right
Completely wrong
It depends
The exporter and the buyer may agree that all the terms in their sales contract must be
stated in the L/C
27. An FOB sales contract agrees that the exporter can deposit the goods in a
warehouse if the ship arrives late and this counts as delivery. If the L/C requires
a B/L and makes no mention of a warehouse receipt, ______
The exporter will still be paid against a warehouse receipt
The bank simply cannot pay against a warehouse receipt
The buyer refuses to pay the exporter against a warehouse receipt
The buyer still has to pay the exporter against the warehouse receipt because his
designated vessel has arrived late at the port of loading
28. What happens first when a bank refuses to pay under a L/C?
The bank will cite a „discrepancy“, some aspect of the documentation that is not in line
with the terms of the credit
A check list of commonly cited discrepancies will be used by banks
The exporter will have to re-submit their shipping documents
The exporter must contact the buyer asking the buyer to instruct the issuing bank to
extend the date of the credit.
29. What are NOT common discrepancies reported by banks in practice?
They are problems with the L/C
They are problems with the B/L
They are problems with insurance and/or the inconsistencies among the documents.
They are problems with Certificate of dangerous goods
30. Which of the following discrepancies is NOT the problem with the L/C?
The shipment was short
The shipment was late
There is no endorsement if endorsement is necessary 🡪 của B/L
The credit has expired
31. Which of the following discrepancies is NOT the problem with insurance

� A

32. What happens if the issuing bank finds a problem with documents and refuses to
send funds to the advising bank to cover payment?
The advising bank has to suffer that loss due to theirr carelessness in checking the
shipping documents
The advising bank gets its money back from the exporter
The payments from the advising bank to the exporter are always made with recourse. The
exporter has to pay back the advising bank in such a case
It is the responsibility of the issuing bank of paying back the advising bank in such a case
33. A commercial invoice must be made out to ....
The exporter
The shipper
Any party endorsing the B/L
The applicant for the L/C, normally to the buyer, unless otherwise stated in the credit
34. As soon as the exporter receives advice that the L/C has been opened, what
should he do?
He should check that it complies with the agreement he negotiated with the buyer
He should check if there is any document that he does not understand
He should check if there is any requirement that he does not agree to
He should check if there is any necessary amendment to the terms of the L/C
35. Which of the following statement is TRUE?
The amount of the credit should be expressed clearly in figures
The amount of the credit should be expressed clearly in words to prevent
misunderstanding
The amount of the credit should be expressed both in figures and in words
It is obligatory to use the ISO currency code instating the amount of the credit
36. Which type of payment is the most advantageous for the exporter?

36A
37. D
38. D

39. A
40. B
41. Which is the most appropriate method of payment for the exporter in the
following case?
A new small customer in a Pacific island republic much given to political disturbances.
The order is for $10,000 worth of assorted textiles
A. Open account with no security
 B. Open account with the bank guarantee
C. Open account with export credit insurance
D. Confirmed L/C
42. Which is the most appropriate method of payment for the exporter in the
following case?
Sale of a bale (roll) of cloth costing $200 to a nearby tailor’s shop with whom you have
done business for 20 years
a. Confirmed L/C
b. Open account with no security
c. Open account with bank guarantee
d. Open account with export credit insurance
43. Which is the most appropriate method of payment for the exporter in the
following case?
A contract for supply of cloth worth $5,000 per month to the government of Oceanea – a
prosperous country. Durantion of the contract is 2 years, but renewable. Contract
represents 25% of turnover
a. Open account with bank guarantee
b. Open account with export credit insurance
c. If possible, a bank guarantee. Otherwise export credit insurance
d. Confirmed L/C
44. The best solution for the exporter to make late payment impossible is .....

� A confirmed, irrevocable at sight L/C

45. D