CE Export Financing & Risk Management Flashcards

Which U.S. government agency provides export financing and loan guarantees to help American exporters compete globally?

Answer: Export-Import Bank of the United States (EXIM)

The Export-Import Bank of the United States (EXIM) is the official export credit agency that provides financing, loan guarantees, and insurance to support U.S. exporters.

What type of export financing arrangement allows a foreign buyer to defer payment while the U.S. exporter receives funds immediately through a bank?

Answer: Banker's acceptance

A banker's acceptance is a time draft drawn on and accepted by a bank, allowing exporters to receive immediate payment while buyers receive short-term credit.

Which type of insurance protects U.S. exporters against non-payment by foreign buyers due to commercial or political risks?

Answer: Export credit insurance

Export credit insurance protects exporters from losses due to buyer insolvency, protracted default, or political events that prevent payment.

What is the term for the risk that exchange rate fluctuations will negatively impact the value of an export transaction?

Answer: Foreign exchange (FX) risk

Foreign exchange risk arises when the currency of payment differs from the exporter's home currency and exchange rates move unfavorably before settlement.

Which financial instrument allows an exporter to lock in an exchange rate for a future transaction, eliminating FX risk?

Answer: Forward exchange contract

A forward exchange contract fixes the exchange rate for a currency transaction at a future date, protecting the exporter from adverse rate movements.

Under a confirmed letter of credit, which party provides the additional payment guarantee beyond the issuing bank?

Answer: A bank in the exporter's country

A confirmed letter of credit adds a guarantee from a bank in the exporter's country, protecting the exporter if the issuing bank or buyer's country defaults.