Test VII: "International Payments"

International payments:
1. are more complex than local payments
2. are less risky
3. require common payment procedures
4. are always guaranteed by a different bank.
In international payments are not used:
1. non – cash payments
2. cash payments
3. payment instruments
4. payment techniques
5. balanced payments
It is not a bank draft:
1. bill of exchange
2. checks
3. money orders
4. promissory note
5. documentary collection
"Cash in advance" means that:
1. the goods will not be shipped until the buyer has paid the seller
2. the exporter retains actual title to the goods that are shipped to the importer.
3. the goods are shipped to a buyer without guarantee of payment
4. an order given to a bank in order to pay a specific amount to a person from the company current account
"Consignment" means that:
1. the goods will not be shipped until the buyer has paid the seller
2. the exporter retains actual title to the goods that are shipped to the importer.
3. the goods are shipped to a buyer without guarantee of payment
4. an order given to a bank in order to pay a specific amount to a person from the company current account
"Open account payments" means that:
1. the goods will not be shipped until the buyer has paid the seller
2. the exporter retains actual title to the goods that are shipped to the importer.
3. the goods are shipped to a buyer without guarantee of payment
4. an order given to a bank in order to pay a specific amount to a person from the company current account
"Check" means that:
1. the goods will not be shipped until the buyer has paid the seller
2. the exporter retains actual title to the goods that are shipped to the importer.
3. the goods are shipped to a buyer without guarantee of payment
4. an order given to a bank in order to pay a specific amount to a person from the company current account
In the case of "open account payment":
1. the goods available to buyers before payment
2. the goods available to buyers after payment
3. the risk belongs to the importer
4. the goods are shipped to a buyer with a strong guarantee of payment
"Money order" represents:
1. an order given by a person to its bank in order to pay a specific amount directly in the beneficiary’s account
2. is a written promise to pay a determinate sum of money made between two parties.
3. unconditional order in writing to pay a specified amount of money to a specified person or to the bearer, upon presentation of the bill or at a specified future date
4. an order given to a bank in order to pay a specific amount to a person from the company current account
"Bill of Exchange" represents:
1. an order given by a person to its bank in order to pay a specific amount directly in the beneficiary’s account
2. is a written promise to pay a determinate sum of money made between two parties.
3. unconditional order in writing to pay a specified amount of money to a specified person or to the bearer, upon presentation of the bill or at a specified future date
4. an order given to a bank in order to pay a specific amount to a person from the company current account against the presented bill.
In the case of a "sight draft":
1. the draft is presented to the buyer for acceptance when the shipment has been made
2. the draft acceptance is after the shipment of goods
3. the goods are available to the buyer before payment
4. the risk for the importer consists in the disposal of unpaid goods
In the case of a "time draft":
1. the draft is accepted by buyer in the delivery moment of goods
2. the draft acceptance is after the shipment of goods
3. the goods are available to the buyer after payment
4. the time of payment is after the maturity of draft
The difference between a Promissory Note and a Bill of Exchange consists on:
1. the maker of a note promises to personally pay the payee rather than ordering a third party to do so
2. the promisory note is more secure than a bill of exchange
3. the issuer of a promisory note is the exporter
4. the amount of money is well determined
It is not a document required in case of a letter of credit:
1. Commercial Invoice
2. Bills of Lading
3. Certificate of Origin
4. Income statement
5. Packing List
In the case of a letter of credit this is not an advantage for the exporter:
1. Payment protection
2. Rapid, local source of repayment, if payable at a local bank
3. Reliance on issuing bank’s credit rather than buyer’s
4. Payment deferred until goods are shipped and documents presented (use of funds)
The Red-Clause Letter of Credit it is used when:
1. in case of an advance payment in favor of an exporter
2. a beneficiary has the right to instruct the paying bank to make credit available to one or more secondary beneficiaries
3. the exporter, as beneficiary, offers its credit as security in order to finance the opening of a second credit
4. the bank on whom the draft is drawn commits to pay the face amount at maturity by stamping “Accepted” across the draft .
Stand-by Letter of Credit is used:
1. only if the importer didn’t fulfill it’s obligations
2. only if the exporter didn’t fulfill it’s obligations
3. when the export price is insufficient due to FX rate changes
4. stipulations concerning freight cost are unacceptable
5. shipping schedule is not met
In the case of Documents against Payment:
1. the buyer may only receives the title and other documents after paying for the goods
2. the buyer may receive the title and other documents after signing a time draft promising to pay at a later date
3. the buyer signs a time draft for payment at a later date
4. the bank issues a commitment for a stated time period to pay a beneficiary a stated amount of money
In the case of Documents against Acceptance:
1. the buyer may only receives the title and other documents after paying for the goods
2. the buyer may receive the title and other documents after signing a time draft promising to pay at a later date
3. the buyer signs a time draft for payment at a later date
4. the bank issues a commitment for a stated time period to pay a beneficiary a stated amount of money
The chief advantage in case of "cash in advance" payments is:
1. No credit extension required
2. Lowers customer resistance by allowing extanded payment after receipt of goods
3. Capital tied up until sales; must establish distributor's creditworthiness need political rish insurance in some countries; increased risk from currency controls
4. If customer does not or cannot accept goods, goods remain at port of entry and no payment is due
The lowest risk is in case of:
1. cash in advance
2. revocable letter of credit
3. open account
4. time draft
5. sight draft
The highest risk is in case of:
1. cash in advance
2. revocable letter of credit
3. open account
4. time draft
5. sight draft
This is not a problem when we pay using a letter of credit:
1. Shipping schedule is not met
2. Description of product insufficient or too detailed
3. Unexpected quantity of product
4. Price is insufficient due to Interest Rate
5. Stipulations concerning freight cost are unacceptable
This is not a benefit for the importer when he use a payment based on the letter of credit:
1. Documentary evidence that the ordered goods have been shipped on time
2. Assurance that necessary clearance documents will be provided
3. Reliance on issuing bank’s credit rather than buyer’s
4. Payment deferred until goods are shipped and documents presented (use of funds)
A "clean letter of credit" means that:
1. the documents are presented without other additional documents or notifications
2. the place where the payment is realized by the exporter bank
3. the L/C is issued by on bank and confirmed by another, obligating both banks to honor drafts drawn in compliance
4. the L/C cannot be revoked without the specific permission of all parties involved, including the exporter

Test VII: "International Payments"

Multiple Choice Test