CES CES Trade Finance & Payment Methods 1

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

A Documentary Letter of Credit provides the highest security for exporters because a bank guarantees payment upon presentation of compliant documents.

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

A sight LC requires the issuing or nominated bank to pay the exporter immediately when conforming documents are presented.

Question 3

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

Accepted Answer

EXIM Bank

Answer

The Export-Import Bank of the United States (EXIM Bank) provides export credit insurance that protects US exporters from commercial and political risks.

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

Open account terms mean goods are shipped before payment, exposing the exporter to the risk of non-payment by the buyer.

Question 5

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

Accepted Answer

A draft payable at a specified future date

Answer

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.

(CES) Certified Export Specialist Practice Test

(CES) Certified Export Specialist Practice Test

CES CES Trade Finance & Payment Methods 1