CES Trade Finance & Payment Methods Flashcards
6 cards from real CES practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CES Trade Finance & Payment Methods flashcards as text
Which payment method offers the greatest security for a US exporter receiving payment from an overseas buyer?
Answer: Documentary Letter of Credit
A Documentary Letter of Credit provides the highest security for exporters because a bank guarantees payment upon presentation of compliant documents.
What does 'sight' mean in the context of a sight letter of credit?
Answer: Payment is made immediately upon presentation of compliant documents
A sight LC requires the issuing or nominated bank to pay the exporter immediately when conforming documents are presented.
Which US government agency offers export credit insurance to protect exporters against foreign buyer default?
Answer: EXIM Bank
The Export-Import Bank of the United States (EXIM Bank) provides export credit insurance that protects US exporters from commercial and political risks.
A US exporter ships goods on open account terms. What is the primary risk?
Answer: The buyer may not pay after receiving the goods
Open account terms mean goods are shipped before payment, exposing the exporter to the risk of non-payment by the buyer.
What is a 'usance' or 'time' draft in documentary collections?
Answer: A draft payable at a specified future date
A usance (time) draft is a bill of exchange that allows the buyer a set number of days (e.g., 30, 60, 90) to pay after acceptance or shipment.
Which Incoterms rule requires the seller to bear all costs and risks, including import duties, until the goods are delivered at the named destination?
Answer: DDP (Delivered Duty Paid)
Under DDP, the seller assumes maximum responsibility, covering all transport costs, insurance, and import duties to the named destination.