CE CE Export Financing & Risk Management 3

Question 1

What is the purpose of a standby letter of credit in export transactions?

Accepted Answer

To serve as a backup payment guarantee if the buyer fails to fulfill contractual obligations

Answer

To replace a commercial invoice

Answer

To certify the origin of goods

Answer

To clear customs at the port of entry

Question 2

Which organization provides the Coface Country Risk ratings used by exporters to assess buyer country creditworthiness?

Accepted Answer

Coface (Compagnie Française d'Assurance pour le Commerce Extérieur)

Answer

World Bank

Answer

International Monetary Fund

Answer

U.S. Department of Commerce

Question 3

What is political risk insurance and which U.S. government agency offers it to American exporters?

Accepted Answer

Insurance against losses from government actions in foreign countries, offered by OPIC/DFC

Answer

Insurance against shipping damage, offered by the U.S. Navy

Answer

Insurance against tariff changes, offered by USTR

Answer

Insurance against currency devaluation, offered by the Fed

Question 4

When a foreign buyer requests extended payment terms of 180 days, what financing technique allows the exporter to receive immediate cash?

Accepted Answer

Discounting the trade receivable with a bank

Answer

Requesting cash in advance

Answer

Issuing a pro forma invoice

Answer

Filing a certificate of origin

Question 5

What is the key difference between documentary collection (D/C) and a letter of credit (L/C)?

Accepted Answer

An L/C provides a bank payment guarantee while D/C relies on the buyer's willingness to pay

Answer

D/C is faster than L/C

Answer

L/C requires a freight forwarder; D/C does not

Answer

D/C is used for services; L/C is for goods only

Question 6

Which U.S. federal program offers grants and cost-sharing to help small U.S. businesses participate in international trade shows to find export buyers?

Accepted Answer

Market Development Cooperator Program (MDCP) / State Trade Expansion Program (STEP)

Answer

Export-Import Bank Working Capital Program

Answer

SBA 8(a) Business Development Program

Answer

USDA Foreign Agricultural Service MAP