Finastra Assessment Test Finastra Assessment Trade Finance 3

Question 1

What distinguishes a 'confirmed' Letter of Credit from an 'unconfirmed' one?

Accepted Answer

The confirming bank adds its own payment undertaking, providing the beneficiary with a second independent guarantee

Answer

The buyer's bank verifies the seller's identity before issuing the credit

Answer

The LC amount is held in escrow by a neutral third party until shipment

Answer

The issuing bank guarantees repayment to the advising bank in case of buyer default

Question 2

In trade-based money laundering (TBML), which red flag is most commonly associated with over- or under-invoicing schemes?

Accepted Answer

Significant discrepancy between the declared value of goods and their fair market value

Answer

Use of Letters of Credit rather than open account trading

Answer

Shipment of goods via multiple transshipment ports

Answer

Use of third-party payment intermediaries for settlement

Question 3

Finastra's trade finance solutions support which industry initiative aimed at digitizing trade documents such as bills of lading and reducing paper-based fraud?

Accepted Answer

The ICC Digital Standards Initiative (DSI) and electronic Bills of Lading (eBL)

Answer

SWIFT gpi (Global Payments Innovation)

Answer

The EU's PSD2 open banking directive

Answer

The DTCC trade repository reporting framework

Question 4

Under a Documents Against Payment (D/P) collection, the buyer receives the shipping documents:

Accepted Answer

Only after making full payment to the collecting bank

Answer

Before making any payment, as a matter of good faith

Answer

After accepting a time draft maturing at a future date

Answer

Upon presentation of a bank guarantee from the buyer's bank

Question 5

Which risk does 'credit insurance' in trade finance primarily protect against?

Accepted Answer

Non-payment by the buyer due to insolvency or protracted default

Answer

Foreign exchange rate fluctuations reducing the value of export proceeds

Answer

Physical loss or damage to goods during transit

Answer

Errors in trade documentation causing LC discrepancies

Question 6

In Finastra's open finance vision for trade, the primary benefit of embedding trade finance APIs into corporate portals is to:

Accepted Answer

Enable corporates to initiate and track trade finance transactions directly within their own ERP and treasury systems

Answer

Replace relationship managers with fully automated LC issuance workflows

Answer

Eliminate the need for SWIFT messaging in cross-border trade settlement

Answer

Standardize trade document formats across all global trade corridors

Question 7

A 'back-to-back Letter of Credit' arrangement is typically used when:

Accepted Answer

An intermediary trader uses an LC received from a buyer as collateral to open a new LC in favor of their own supplier

Answer

An exporter needs two banks to jointly confirm a single LC to share risk

Answer

A buyer requests that payment be split equally between two beneficiaries

Answer

An issuing bank transfers a portion of LC risk to a reinsurer