CE CE Export Financing & Risk Management 2

Question 1

What is 'country risk' in the context of export financing?

Accepted Answer

The probability of financial loss due to political or economic instability in the buyer's country

Answer

Country risk encompasses political instability, currency inconvertibility, war, and government actions in the buyer's country that may prevent payment.

Question 2

Which SBA program provides loan guarantees specifically to small businesses seeking to export goods or services?

Accepted Answer

SBA Export Working Capital Program

Answer

The SBA Export Working Capital Program guarantees up to 90% of loans for export-related working capital, helping small businesses finance export transactions.

Question 3

What is forfaiting in international trade finance?

Accepted Answer

The purchase of medium-term receivables from exporters at a discount on a non-recourse basis

Answer

Forfaiting involves a financial institution purchasing export receivables at a discount without recourse to the exporter, transferring all risk to the forfaiter.

Question 4

Which payment term carries the MOST risk for the U.S. exporter?

Accepted Answer

Open account

Answer

Open account terms mean the exporter ships goods before receiving payment, bearing all credit risk if the buyer fails to pay.

Question 5

What does 'recourse' mean in export factoring?

Accepted Answer

The factor can return unpaid receivables to the exporter if the buyer defaults

Answer

In recourse factoring, if the buyer doesn't pay, the factor can demand the exporter repurchase the receivable, leaving credit risk with the exporter.

(CE) Certified Exporter Practice Test

(CE) Certified Exporter Practice Test

CE CE Export Financing & Risk Management 2