CES CES Trade Finance & Payment Methods

Question 1

Which payment method offers the greatest security for a US exporter receiving payment from an overseas buyer?

Accepted Answer

Documentary Letter of Credit

Answer

Open Account

Answer

Cash in Advance

Answer

Documentary Collection

Question 2

What does 'sight' mean in the context of a sight letter of credit?

Accepted Answer

Payment is made immediately upon presentation of compliant documents

Answer

Payment is due 90 days after shipment

Answer

Payment is contingent on buyer inspection

Answer

Payment is released after customs clearance

Question 3

Which US government agency offers export credit insurance to protect exporters against foreign buyer default?

Accepted Answer

EXIM Bank

Answer

SBA

Answer

ITA

Answer

CBP

Question 4

A US exporter ships goods on open account terms. What is the primary risk?

Accepted Answer

The buyer may not pay after receiving the goods

Answer

Goods may be seized at the foreign port

Answer

The exporter must prepay all freight costs

Answer

Currency conversion delays increase costs

Question 5

What is a 'usance' or 'time' draft in documentary collections?

Accepted Answer

A draft payable at a specified future date

Answer

A draft payable immediately upon presentation

Answer

A standby letter of credit

Answer

A demand guarantee issued by the exporter's bank

Question 6

Which Incoterms rule requires the seller to bear all costs and risks, including import duties, until the goods are delivered at the named destination?

Accepted Answer

DDP (Delivered Duty Paid)

Answer

DAP (Delivered at Place)

Answer

CIF (Cost, Insurance and Freight)

Answer

FCA (Free Carrier)