CBP - Certified Banking Professional International Banking Practices Questions and Answers

Question 1

In correspondent banking, what is the term for a bank's account held with a foreign bank, denominated in the currency of that foreign country?

Accepted Answer

Nostro Account

Answer

Vostro Account

Answer

Loro Account

Answer

Settlement Account

Question 2

A U.S.-based exporter is hesitant to ship goods to a new buyer in Turkey without a guarantee of payment. The buyer arranges for their bank to provide an instrument that promises payment to the exporter upon presentation of specific shipping documents, such as the bill of lading and commercial invoice. Which international trade finance instrument is being utilized?

Accepted Answer

Documentary Letter of Credit

Answer

Open Account

Answer

Documentary Collection

Answer

Standby Letter of Credit

Question 3

Which of the following is a global, member-owned cooperative that provides a secure messaging network enabling financial institutions worldwide to send and receive information about financial transactions, but does not handle or settle funds itself?

Accepted Answer

SWIFT

Answer

Fedwire

Answer

SEPA

Answer

CHAPS

Question 4

A Canadian company has agreed to purchase raw materials from a supplier in the United Kingdom, with payment of £500,000 due in 60 days. The Canadian company is concerned that the British Pound (GBP) may strengthen against the Canadian Dollar (CAD) before the payment date, increasing the cost of the materials in its home currency. This is a primary example of which type of risk?

Accepted Answer

Transaction Risk

Answer

Translation Risk

Answer

Credit Risk

Answer

Sovereign Risk

Question 5

Which inter-governmental body sets the global standards for combating money laundering and terrorist financing, famously known for its "40 Recommendations"?

Accepted Answer

The Financial Action Task Force (FATF)

Answer

The World Bank

Answer

The Basel Committee on Banking Supervision (BCBS)

Answer

The International Monetary Fund (IMF)

Question 6

An exporter wants to minimize its risk of non-payment when selling to a buyer in a country with high political and economic instability. Which of the following trade finance arrangements provides the highest level of payment security for the exporter?

Accepted Answer

Confirmed Irrevocable Letter of Credit

Answer

Open Account

Answer

Documents Against Payment (D/P)

Answer

Unconfirmed Irrevocable Letter of Credit