EXPORT - IMPORT FINANCE MCQs
Multiple Choice Questions.
1. Incoterms cover
A. trade in intangibles
B. ownership and transfer rights
C. contracts of carriage.
D. rights and obligations of parties to contract of sales
ANSWER: D
2. Which of the following term cannot be used for transportation of goods by sea?
A. CFR.
B. DDP.
C. DES
D. DEQ.
ANSWER: B
3. The incoterm providing least responsibility to seller is
A. EXW.
B. DDP.
C. FOB
D. CIF.
ANSWER: A
4. The group of incoterms under which the seller's responsibility is to obtain freight paid transport
document for the main carriage is
A. E terms
B. C terms.
C. D terms
D. F tenns.
ANSWER: B
5. The incoterm should indicate the place of shipment in case of
A. F terms
B. E terms.
C. C terms.
D. D terms.
ANSWER: A
a
6. Incoterm is specific about the responsibility for marine insurance in case of
A. FOB and EXW
B. FOB and CIF.
C. CIF and CIP.
D. CPT and DDP.
ANSWER: C
7. The group of terms arranged in order of increasing responsibility of exporter is.
A. C,D,E and F terms.
B. D,E,F and C terms.
C. E,F,C and D terms.
D. F,C,E and D tenns.
ANSWER: C
8. The price quoted by the seller for the product
A. will vary depending upon the incoterm chosen.
B. irrespective of the incoterm.
C. will be the base price; the effect of incoterm to be added later.
D. will include only cost.
ANSWER: A
9. Adoption of incoterm is
A. compulsory for all international contracts
B. compulsory for all letter of credit transactions.
C. optional for the parties to the contract.
D. mandatory for transactions with Europe.
ANSWER: C
10. Which of the following term cannot be used for transportation of goods by Road or Air?
A. FAS.
B. DDR
C. EXW.
D. CIR
ANSWER: A
11. Packing credit is
A. an advance made for packing goods for export.
B. pre-shipment finance for export.
C. a priority sector advance.
D. advance for importer.
ANSWER: B
12. The amount of packing credit should not normally exceed
A. the local cost of manufacture for the exporter.
B. FOB value of the export contract.
C. CIF value of the export contract.
D. the cost of manufacture or FOB value of the export contract whichever is less.
ANSWER: D
13. Which of the following person is not eligible for packing credit?
A. a .merchant exporter.
B. a person making deemed exports.
C. sub-suppliers to manufacture exporter.
D. supplier to sub-supplier to manufacture exporter.
ANSWER: D
14. The running account facility for packing credit is available for
A. status holders only.
B. export for specified goods.
C. exporters with good track record
D. exporters with orders above Rs. 100 crores.
ANSWER: C
15. The advantage to the exporter of running account facility of packing credit is
A. production of letter of credit or firm order is completely waive
B. the period of facility need not be adhered to.
C. production of letter credit on firm order is waived immediately they must be produced within
reasonable time.
D. the rate of interest is low.
ANSWER: C
16. The exemption from the condition credit should not exceed domestic cost of production is not waived
for
A. commodity eligible for duty drawback.
B. commodity imported under advance licence
C. HPS groundnuts.
D. agro based productions like tobacco.
ANSWER: B
17. The substitution of commodity/fresh export of adjustment of packing credit is not available for
A. advance against sensitive commodities.
B. transactions of sister/associate/group concerns.
C. exports availing running account facility.
D. exports with imports.
ANSWER: B
18. Normally the maximum period for which packing credit advances are made is
A. 90 days.
B. 135 days.
C. 180 days.
D. 360 days.
ANSWER: C
19. A pre-shipment advance is not expected to be adjusted by
A. proceeds of export bill
B. export incentives.
C. post-shipment finance.
D. local funds.
ANSWER: D
20. A packing credit was granted against an export order but the export could not take place
A. It should be reported to the RBI
B. The exporter should be black list
C. Claim should be preferred with ECG
D. Interest at domestic rate should be charged on the advance from the date of advance
ANSWER: D
21. 2 For direct export the packing credit should normally be granted only against
A. a letter of credit.
B. firm order.
C. export licence.
D. a letter of credit or firm order.
ANSWER: D
22. For packing credit in rupees the interest of period up to 180 days is chargeable at
A. BPLR minus 2.5%.
B. BPLR minus 3%.
C. not exceeding BPLR minus 2.5%.
D. not less than BPLR minus 2.5%.
ANSWER: C
23. Pre-shipment credit in foreign currency is available for a period of
A. maximum 180 days.
B. minimum 180 days.
C. maximum 270 days.
D. maximum 360 days.
ANSWER: A
24. Pre-shipment credit in foreign currency can be availed in
A. US Dolor only.
B. the currency of export only.
C. the currency of import only.
D. any permitted currency.
ANSWER: D
25. Advising of letter ofcredit will be done by the bank
A. only to its customers
B. to any person provided the letter of the credit is issued by its correspondent bank.
C. free of charge to its customers and for a cost to others.
D. to any beneficiary and from any issuing bank.
ANSWER: B
26. The following is not a post-shipment advance
A. negotiation of bill under letter of credit
B. purchase of foreign bill.
C. advance against foreign bill for collection
D. packing credit.
ANSWER: D
27. A bill drawn under a letter of credit contains discrepancies
A. the bank should refuse to negotiate documents
B. take the bill on collection basis only.
C. must negotiate irrespective of discrepancies
D. may purchase it or take it for collection, but should not refuse to handle the bill.
ANSWER: D
28. If an export bill which was purchased /negotiated is not realized within reasonable time from the due
date the bank should
A. reserve the bill from the export bill purchase portfolio.
B. make a claim with ECGC
C. report to RBI.
D. take further bills from the exporter only on collection basis.
ANSWER: A
29. The following is a must for an exporter
A. GR form.
B. EP form.
C. PP form.
D. GRX form.
ANSWER: C
30. Duty drawback is the refund of duty chargeable on
A. Exported material
B. Imported material
C. Damaged material
D. Exports to Indian owned warehouses in Europe.
ANSWER: B
31. Availing post-shipment credit in foreign currency is compulsory for
A. exporters who have not availed packing credit.
B. all exporters who have availed packing credit.
C. exporters who have availed pre-shipment credit in foreign currency.
D. exporters who have availed credit from banks.
ANSWER: C
32. Post-shipment credit in foreign currency can be availed by
A. use of on-shore foreign currency funds
B. banks raising foreign currency funds abroad
C. exporters arranging funds abroad
D. any of the above methods.
ANSWER: D
33. Advance remittance from importer can be accepted by an exporter in India provided
A. the advance does not carry interest payment.
B. shipment will be made only after one year from the date of receipt of advance.
C. advance does not exceed 25% of export value.
D. rate of interest,if payable, does not exceed Libor plus 1%.
ANSWER: D
34. A bank may refuse to accept an export bill for collection
A. when the customer has sufficient limits under bill discounting facility.
B. when the documents have discrepancies when compared to letter of credit requirements.
C. when the documents are received from a non customer
D. when the documents are received from a customer.
ANSWER: C
35. . If the importer refuses to accept the bill drawn on him the exporter
A. should reimport the goods.
B. must find an alternate buyer.
C. may reimport or sell to an alternate buyer depending upon commercial expediency
D. sue the importer.
ANSWER: C
36. If export cargo is lost in transit, the exporter should
A. claim under marine insurance.
B. claim with ECGC
C. seek write off of post-shipment credit.
D. seek refund of customs duty.
ANSWER: A
37. Pre-shipment rupee credit from Exim bank is available for
A. period upto 180 days.
B. period beyond 180 days.
C. trunkey proects only.
D. foreign currency components only.
ANSWER: B
38. For export oriented units, Exim bank finances
A. term loans only.
B. both working capital and term loans.
C. term loans, working capital and long term working capital.
D. for investment from overseas.
ANSWER: C
39. Which of the following is not a common feature of direct lending by Exim bank?
A. They are for medium or long term.
B. The size of the loan is high.
C. Security is not insisted upon.
D. Interest rates are relatively low.
ANSWER: C
40. Bid Bond issued as part of
A. Turnkey project
B. Post award clearance
C. supply bidding process
D. Deferred Payment
ANSWER: C
41. Exim bank lending to foreign governments take the form of
A. soft loans.
B. commercial loans.
C. lines of credit.
D. relending facility.
ANSWER: C
42. The facility that is available to commercial banks in India from Exim bank is
A. refinancing of export credit.
B. export bill re-discounting.
C. syndication of export credit risks.
D. all the above.
ANSWER: D
43. Exim bank issues guarantees on behalf of
A. all exporters from India.
B. exporters of construction and turnkey projects
C. banks in India.
D. Govt, of India.
ANSWER: B
44. Exim bank issues guarantees to commercial for
A. all export advances
B. all export advances repayable beyond one year.
C. post-shipment suppliers credit from one year to three years.
D. loans with refinance from Exim bank.
ANSWER: C
45. Export factoring is available for
A. short term exports.
B. medium term exports.
C. all exports.
D. export under consignment basis.
ANSWER: A
46. Which of the following service is not provided by an export factor?
A. invoice discounting.
B. providing credit information.
C. maintenance of debtors account.
D. none of the above.
ANSWER: D
47. Export factoring encourages the following method of payment
A. open account system.
B. letter of credit method
C. documentary bill.
D. advance payment.
ANSWER: A
48. Factoring refers to.
A. discounting of any export bill.
B. discounting of medium term export bill.
C. writing off unrealized export bill.
D. waiver of charges on export bills.
ANSWER: B
49. Under supplier's credit for deferred payment exports scheme of Exim bank
A. pre-shipment finance is available for periods beyond 180 days
B. post-shipment finance is available in Indian rupees for deferred payment exports.
C. post-shipment finance is available in foreign currency for deferred payment exports.
D. post-shipment finance is available in Indian rupees or foreign currency for deferred payment exports.
ANSWER: A
50. Which of the following statements relating to consultancy and technology services finance programme
of Exim bank is wrong?
A. The exporter is expected to get an advance payment of 25%
B. The export should be covered byECGC policy.
C. Minimum period of the loan is seven years.
D. They should be secured by a government guarantee or letter of credit.
ANSWER: C
51. Pre-shipment credit is available from Exim bank is available for
A. period up to 180 days.
B. period beyond 180 days.
C. turnkey projects only.
D. foreign currency component only.
ANSWER: B
52. Extension period of credit for export
A. 180 days
B. 90 days
C. 220 days
D. 270 days
ANSWER: B
53. Which of the following is not a common feature of direct lending by Exm bank?
A. They are for medium or long term.
B. The size of the loan is high.
C. Security is not insisted upon.
D. Interest rates are relatively large.
ANSWER: C
54. The standard policy of ECGC covers the risk of
A. buyers failure to obtain import lisence
B. insolvency of the collecting bank
C. cancellation of the import licence in the buyers country.
D. all the above.
ANSWER: C
55. The standard policy of ECGC is issued
A. 90% for political risk and 60% for commercial risk.
B. 90% for both political and commercial risk.
C. 60% for political risk and 90% for commercial risk.
D. 60% for both political and commercial risk.
ANSWER: B
56. Loans above Rs 50 crores need clearance from
A. RBI, EXIM Bank, ECGC
B. RBI
C. EXIM Bank
D. ECGC
ANSWER: A
57. The small exporter's policy of ECGC is issued to
A. any exporter in the SSI category
B. any exporter who is exempt from excise duty.
C. an exporter with expected turnover of Rs. lcrore.
D. an exporter with an anticipated turnover in the next twelve months not exceeding of Rs. 50 lakhs.
ANSWER: D
58. Which of the following information about the small exporter's policy is wrong?
A. Risk coverage is 95% for commercial risks and 100% for political risk.
B. The policy issued for 12 months.
C. The premium payable is less than standard policy.
D. None of the above.
ANSWER: D
59. The maturity factoring facility of ECGC protects the exporters against
A. failure of the buyer to obtain authority as per the regulations of his country.
B. risk normally covered by General Insurance.
C. failure of the buyer to pay.
D. none of the above.
ANSWER: C
60. Cover under the guarantee of ECGC is available to
A. the bank against the default of the importer.
B. the bank against the default of the exporter.
C. the bank against the default of the importer and exporter.
D. the exporter against the default of the importer.
ANSWER: B
61. Pre-shipment advances granted in excess of FOB value of contract against duty drawback can be
covered under
A. packing credit guarantee
B. whole turnover packing credit guarantee.
C. export production finance guarantee.
D. export finance guarantee.
ANSWER: C
62. Export finance guarantee of ECGC protects
A. banks providing foreign currency loans to correspondents.
B. banks providing foreign currency loans to contractors.
C. overseas branches financing Indian exports.
D. overseas branches financing Indian imports.
ANSWER: B
63. Pre-shipment advances against export incentives can be covered under
A. post shipment export credit guarantee
B. whole turnover post shipment credit guarantee
C. export production finance guarantee.
D. export finance guarantee.
ANSWER: D
64. The rate of premium payable to ECGC for eligible advances covered under whole turnover packing
credit guarantee is
A. 6 paise per Rs.100 p. on daily average products
B. 6 paise per Rs.100 p.m. on daily average products.
C. 6 paise per Rs.100 p. on monthly average products.
D. 6 paise per Rs.100 p. on yearly average products.
ANSWER: A
65. The risk to a bank in confirming a letter of credit is covered by ECGC under
A. export performance guarantee
B. transfer guarantee.
C. export finance guarantee.
D. import and export finance guarantee.
ANSWER: B
66. Linder exchange fluctuation risk cover , the ECGC provides cover
A. to the exporters on deferred payment terms against exchange fluctuations.
B. to banks for advances made in foreign currency to importers abroad
C. to banks against advances made deferred payment export.
D. to banks for advances made in foreign currency to importers and exporters abroad
ANSWER: A
67. Working group consist of
A. RBI, ECGC and EXIM Bank
B. RBI
C. ECGC and EXIM Bank
D. EXIM and Commercial Baks
ANSWER: A
68. The percentage of contract value the exporter can avail as advance from importer
A. 15%
B. 25%
C. 30%
D. 35%
ANSWER: A
69. Commodity Boards do not differ from Export Promotion Councils in respect of the following
A. Commodity Boards deal with problems relating to production also.
B. Commodity Board is a statutory body.
C. Commodity Board covers a specific product.
D. None of the above.
ANSWER: C
70. . Which of the following organization does not specialize in training activity?
A. Indian institute of Foreign Trade.
B. Indian Trade Promotion Organization.
C. Indian Institute of Packaging.
D. None of the above.
ANSWER: B
71. The institution specializing in organizing fairs and exhibitions is
A. Indian Institute of Foreign Trade.
B. Federation of Indian Export Organization.
C. Indian trade Promotion Organization.
D. None of the above.
ANSWER: C
72. Funds allocated under ASIDE should be used for
A. developing infrastructure such as roads.
B. creation of free trade zone.
C. advertisements abroad
D. conducting trade tours.
ANSWER: A
73. The red clause letter of credit is also known as
A. Stand by credit
B. Anticipatory credit
C. Automatic credit
D. Back to Back credit
ANSWER: B
74. Duty drawback is available for
A. import duty on imported components.
B. central excess on indigenous companies.
C. both (a ) and (b) above.
D. (c) above and VAT.
ANSWER: C
75. Excise duty exemption on exports is available for duty paid on
A. finished products only.
B. components only.
C. finished products and components.
D. imported item.
ANSWER: C
76. Submission to the bank of the bill of entry as evidence of import is mandatory where the value of
import exceeds
A. USD 10,000.
B. USD 25,000.
C. USD 1,00,000.
D. USD 1,00,000 in a year.
ANSWER: C
77. A bank receives for collection a bill drawn on an importer who is not it's customer, for retirement of
the bill, the bank
A. can accept payment in cash
B. should forward the bill to the importer's bank for delivery of documents
C. can accept cheque drawn by the importer on his bank.
D. can accept cheque drawn in the favor of the importer duly endorsed in bank's favor.
ANSWER: C
78. The currency in which payment for import is made depends upon
A. The country from which the goods are shipped
B. The country of origin of goods.
C. The arrangement between the buyer and seller.
D. The bank which the importer's bank has correspondent relationship.
ANSWER: A
79. The advance remittance against imports is subject to the conditions
A. the amount should not excess USD 25000.
B. it should earn interest at LIBOR.
C. the import should be capital goods.
D. none of the above.
ANSWER: D
80. Import license are required
A. for all imports.
B. for all capital imports.
C. import of goods covered by negative list.
D. none of the above.
ANSWER: C
81. A bank opening a letter credit gets charge over the imported goods till payment is made by the
importer under the provisions of
A. application for the credit
B. the letter of credit.
C. the sale contract.
D. the import licence.
ANSWER: A
82. The maximum period of credit fixed by RBI depends on
A. Anticipated life of export goods
B. Extent of foreign competition
C. Nature of the foreign market
D. All the above
ANSWER: D
83. For deferred payment import remission should be sought from the Reserve Bank when
A. the period of credit beyond one user.
B. the imports in a year exceeds USD 20 millions.
C. the imports per transaction exceeds USD 20 millions.
D. all in the cost borrowing exceeds LIBOR.
ANSWER: C
84. Standby letters of credit can be used by authorized dealers in India for
A. exporters liability on account of exports from India.
B. selective importers
C. both A and B above.
D. none.
ANSWER: C
85. An exporter cannot obtain details about prospective buyers from
A. yellow pages.
B. web sites.
C. Indian embassy abroad
D. none of the above.
ANSWER: D
86. Under advance remittance as a method of payment the credit risk is borne by
A. the importer.
B. the exporter.
C. importer's bank.
D. none.
ANSWER: A
87. Open account was used as a method of payment indicates
A. the transactions are legal.
B. the buyer has no money to pay immediately.
C. the seller wants to sell desparately.
D. none of the above.
ANSWER: D
88. Open account method of payment is beneficial to
A. the buyer
B. the seller.
C. the buying agent.
D. both the buyer and seller.
ANSWER: A
89. Cash on delivery method is normally used for
A. bulk cargo with immediate market
B. slow moving terms.
C. small but valuable items sent by post.
D. exports to countries with balance of payments problem
ANSWER: C
90. Documents against payment term indicates
A. the documents are sent by post.
B. the export is risky.
C. the collecting bank will hand the documents to the buyer against payment.
D. the exporter delivers the documents to the bank against advance.
ANSWER: C
91. The best form of method of payment for an importer would be
A. advance remittance.
B. letter of credit.
C. documents against payment.
D. open account.
ANSWER: D
92. When goods are sent to an agent of an exporter in the importing country, the method of payment
adopted is
A. open account.
B. letter of credit.
C. consignment sale.
D. document against acceptance.
ANSWER: C
93. The method of payment where the exporter relies on the undertaking of a bank to pay is.
A. bank guarantee
B. letter of credit.
C. letter of comfort.
D. none of the above.
ANSWER: B
94. Letter of credit transactions are generally governed by the provisions of
A. Uniform customs and Procedures for Documentary Credits.
B. United Conference on Practices for Documentary Credits.
C. Uniform Customs and Practice for Documentary Credits
D. Uniform Code and Procedure for Documentary Credits.
ANSWER: C
95. The beneficiary under a letter of credit is
A. the bank opening the credit.
B. the customer of the opening bank.
C. the confirming bank.
D. the exporter.
ANSWER: D
96. A letter of credit is opened on behalf of
A. exporter customers.
B. importer customers.
C. any party wishing to make payment abroad
D. none of the above.
ANSWER: B
97. A letter of credit is addressed to
A. the beneficiary.
B. the negotiating bank.
C. the reimbursing bank.
D. none.
ANSWER: A
98. A letter of credit that provides for granting of pre-shipment finance as well as storage of goods in the
name of the bank is
A. a red clause letter of credit
B. a standby letter of credit.
C. a green clause letter of credit.
D. a secured letter of credit.
ANSWER: C
99. When a letter of credit does not indicate whether it is revocable or irrevocable, it is treated as
A. revocable
B. irrevocable
C. revocable or irrevocable at the option of the beneficiary.
D. revocable or irrevocable at the option of the negotiating bank.
ANSWER: B
100. Payment for bills drawn under letter of credit should be made by the negotiating bank
A. after the documents are approved by the issuing bank.
B. immediately or on a future date depending upon the terms of credit.
C. only in foreign currency.
D. immediately in all cases.
ANSWER: B
101. Under an acceptance letter of credit, the responsibility of the issuing bank is
A. only to accept the bill
B. to pay against the bill
C. to accept the immediately and also to pay the amount of the bill on its due date.
D. to get the acceptance of the importer on the bill.
ANSWER: C
102. A confirmed letter of credit is one
A. confirmed to be authention
B. confirmed by the importer to be correct.
C. confirmed by the exporter that he agrees to the conditions.
D. confirmed by a bank (other than the opening bank) in the exporter's country.
ANSWER: D
103. Under the confirmed letter of credit the undertaking the confirming bank is
A. in addition to that of the opening bank.
B. in substitution of the undertaking of the opening bank.
C. subject to government policies to the exporter country.
D. none of the above.
ANSWER: A
104. A credit which provides for reinstatement of the amount as and when bills are drawn under it is called
A. reinstatement credit
B. reimbursement credit
C. revolving credit.
D. back-to-back credit.
ANSWER: C
105. Working Group for approval of project exports does not include
A. Reserve Bank of India.
B. Financing bank.
C. Exim bank.
D. DGFT.
ANSWER: D
106. For project exports fulfilling norms for period of credit, in principle sanction can be given by
A. the financing bank.
B. Exim bank.
C. The financing bank for contracts worth up to Rs 25 crores and Exim bank for contracts worth up to
RS 100 crores.
D. the financing bank for contracts worth up to Rs 100 crores and Exin bank for contracts worth up to
Rs 25 crores.
ANSWER: C
107. The following statement with respect to moratorium on repayment of principal on project export is
not correct
A. For capital goods exports the maximum period of moratorium is 1 year.
B. For turnkey project exports the maximum period moratorium is 2 years.
C. For consumer goods export the maximum period moratorium is 3 years.
D. None of the above.
ANSWER: C
108. Export of services on deffered payment terms requires clearance of the Working Group for
A. contracts beyond Rs 5 crores.
B. contracts beyond 10 crores
C. contracts beyond 20 crores
D. all contracts.
ANSWER: D
109. In case of failure of the exporter, the liability of the bank which has issued the performance guarantee
is to
A. compel the exporter to fulfill his obligation.
B. find alternative contractor who can execute the contract
C. financially compensate the beneficiary up to the value of the contract
D. financially compensate the beneficiary up to the guaranteed amount.
ANSWER: D
110. Advance payment guarantee assures
A. the beneficiary that the exporter will make advance payments.
B. the exporter that the importer will make advance payments.
C. the importer to refund the money he has advanced to the exporter, if the latter fails.
D. the exporter that the bank will extend credit for the contract.
ANSWER: C
111. Indian parties are prohibited from making investment in foreign entity engaged in the business of
A. real estate.
B. real estate or banking.
C. real estate or banking or agriculture.
D. none of the above.
ANSWER: B
112. Direct investment in a joint venture abroad can be made by an Indian party with ceiling on limit under
automatic route if the investment is made from
A. balances in EEFC account
B. funds raised through ADR/GDR.
C. balances in EEFC account or funds raised through ADR/GDR.
D. no such provision.
ANSWER: C
113. Which of the following is not an approved method of funding direct investment in a foreigh joint
venture?
A. Capitalisation of reserves
B. Issusing shares in foreign market.
C. Swap of shares.
D. Utilisation of ECB proceeds.
ANSWER: B
114. An Indian entity which has made direct investment abroad is not required to
A. repatriate to India the dues receivable from foreign entity.
B. submit annual performance report to Reserve Bank.
C. ensure return on investment is not less than the prime rate in the country of investment.
D. none of the above.
ANSWER: C
115. Export Credit Guarantee Corporation(ECGC) policies do not cover risk against
A. buyer's protracted default to pay for the goods.
B. war in buyer's country.
C. buyer's failure to obtain necessary import licence or exchange authorization from authorities in his
country.
D. cancellation of export licence.
ANSWER: C
116. The standard policy of ECGC covers risk of
A. buyer's failure to obtain import licence.
B. insolvency of the collecting bank.
C. cancellation of import licence in the buyer's country.
D. all the above.
ANSWER: C
117. The standard policy of ECGC protects loss to the extent of
A. 90% for political risk and 60% for commercial risk.
B. 90% for both political and commercial risks.
C. 60% for political risk and 90% for commercial risk.
D. 60% for both political and commercial risks.
ANSWER: B
118. The maximum amount of claim against an individual buyer that ECGC will accept under its standard
policy issued to an exporter is known as
A. maximum liability.
B. credit limit.
C. individual limit.
D. there is no such ceiling.
ANSWER: B
119. The standard policy of ECGC is issued
A. on whole turnover basis for 24 months.
B. on whole turnover for 12 months.
C. against each consignment separately.
D. on monthly basis.
ANSWER: A
120. Funds allocated under ASIDE should be used for
A. developing infrastructure such as roads.
B. creation of free trade zones
C. advertisements abroad
D. conducting trade tours.
ANSWER: A
121. Unless prohibited by letter of credit, a bank can accept
A. claused bill of lading.
B. received for shipment bill of lading.
C. bill of lading indicating that the carrying vessel is propelled by sail only
D. none of the above.
ANSWER: D
122. Market access initiative is not available for
A. conducting market studies
B. participation in international trade fairs
C. Testing charges for engineering products
D. None of the above
ANSWER: D
123. Guarantee credit is other name for
A. back to back credit
B. anticipatory credit
C. standby credit
D. Automatic credit
ANSWER: C
124. Amendment to a letter of credit should be advised through the
A. negotiating bank
B. advising bank.
C. issuing bank
D. none of the above.
ANSWER: B
125. 19 A guarantee issued by a bank in lieu of bid money to be deposited by the exporter to participate in
the tender is a
A. bid bond guarantee
B. performance guarantee.
C. advance payment guarantee
D. retention money guarantee.
ANSWER: A
126. A guarantee issued in favour of an importer so that he releases entire contract amount instead of
retaining a portion is
A. performance guarantee
B. retention money guarantee.
C. bid bond guarantee.
D. advance payment guarantee.
ANSWER: B
127. For export guarantees issued a bank may obtain cover from ECGC under its
A. export performance guarantee.
B. retention money guarantee.
C. bid bond guarantee.
D. advance payment guarantee.
ANSWER: A
128. The statutory basis for regulation of foreign trade in India is
A. Foreign Trade( Development and Regulation) Act.
B. Foreign Exchange Management Act.
C. Customs Act.
D. Director General of Foreign Trade.
ANSWER: A
129. Two parties agreeing to buy and sell from each other without involving payment is known as
A. Domestic trade.
B. foreign trade.
C. Countertrade.
D. non paying trade.
ANSWER: C
130. Banks can permit reduction in value of export bills up to
A. 1%.
B. 2%.
C. 5%.
D. 10%.
ANSWER: D
131. Undrawn balance on export bills are permitted up to
A. 10%
B. 15%
C. 5%
D. 2%
ANSWER: A
132. For imports from Pakistan, payment should be made in
A. US dollars.
B. Indian Rupee.
C. Pakistan currency.
D. any currency.
ANSWER: A
133. The time limit for export realization
A. is 2 months from the date of shipment.
B. is 3 months from the date of shipment
C. is 4 months from the date of shipment.
D. is 6 months from the date of shipment.
ANSWER: D
134. Comprehensive risk policy covers
A. only commercial risk.
B. only political risk.
C. both commercial and political risk
D. none of the above.
ANSWER: C
135. 21 Export turnover policy is for
A. large exporters who pay not less than Rs 10 lakhs per annum towards premium
B. large exporters who pay not less than 25 lakhs per annum towards premium.
C. small exports who pay less than 10 lakhs per annum.
D. small exporters who pay more than 10 lakhs premium per annum.
ANSWER: A
136. Which one of the following statements relating to Consultancy and Technology Services Finance
Programme of Exim Bank is Wrong?
A. The exporter is expected to get an advance payment of 25%.
B. The export should be covered by ECGC policy.
C. Minimum period of loan is seven years.
D. They should be secured by a government guarantee or letter of credit.
ANSWER: C
137. For Export Oriented Units, Exim Bank finances
A. . term loans only.
B. both working capital and term loans.
C. term loans, working capital as long term working capital.
D. only investment overseas.
ANSWER: C
138. Which one of the following is not a common features of direct lending by Exim Bank?
A. They are for medium or long-term.
B. The size of the loan is high.
C. Security is not insisted upon.
D. Interest rates are relatively low.
ANSWER: C
139. The facility that is available to commercial banks in India from Exim Bank is
A. refinance of export credit.
D. all the above.
ANSWER: D
140. Exim bank issues guarantees on behalf of
A. all exporters from India.
B. exporters of construction and turnkey projects
C. banks in India.
D. Government of India.
ANSWER: B
141. Export factoring encourages the following method of payment
A. open account system
B. letter of credit method
C. documentary bills.
D. advance payment.
ANSWER: A
142. For availing discounting of bills with forfeiter, the exporter should produce
A. avalised bills of exchange or promissory notes accepted by importer's bank
B. avalised bills of exchange or promissory notes accepted by exporter's bank.
C. Reserve Bank permit.
D. no objection certificate from Exim bank.
ANSWER: A
143. Which of the following is not a basic objective of documentation in foreign trade?
A. to assure that the exporter will receive the payment.
B. to assure that the importer will receive the goods.
C. to reduce foreign exchange risk.
D. none of the above.
ANSWER: D
144. Which of the following is not an important document in foreign trade?
A. a check for the value of goods.
B. a draft.
C. bill of lading.
D. a letter of credit.
ANSWER: A
B. export bills rediscounting.
C. syndication of export credit
145. . risk is the potential exchange loss from outstanding obligations as a result of exchange-rate
fluctuations.
A. Trade.
B. Exchange.
C. Finance.
D. Transaction.
ANSWER: D
146. Foreign exchange risk can be reduced by using .
A. forward contracts
B. futures contracts.
C. currency options.
D. all of the above.
ANSWER: D
147. Which of the following is not a condition for drafts to be negotiable?
A. must be in writing, signed by the drawer.
B. must contain a promise to pay a certain sum if goods are receive
C. must contain an order to pay.
D. must be payable on sight or at a specified date.
ANSWER: B
148. . If a draft is made to bearer, payment should be made to .
A. a bank.
B. drawer.
C. acceptor.
D. anyone who presents the draft.
ANSWER: D
149. If a draft is accepted by a bank, it becomes a .
A. valid draft.
B. demand draft
C. usance draft.
D. bankers acceptance.
ANSWER: D
150. Forms of countertrade include the following except .
A. simple barter.
B. clearing arrangement.
C. counter purchase.
D. mutual agreement.
ANSWER: D
Multiple Choice Questions.
1. Incoterms cover
A. trade in intangibles
B. ownership and transfer rights
C. contracts of carriage.
D. rights and obligations of parties to contract of sales
ANSWER: D
2. Which of the following term cannot be used for transportation of goods by sea?
A. CFR.
B. DDP.
C. DES
D. DEQ.
ANSWER: B
3. The incoterm providing least responsibility to seller is
A. EXW.
B. DDP.
C. FOB
D. CIF.
ANSWER: A
4. The group of incoterms under which the seller's responsibility is to obtain freight paid transport
document for the main carriage is
A. E terms
B. C terms.
C. D terms
D. F tenns.
ANSWER: B
5. The incoterm should indicate the place of shipment in case of
A. F terms
B. E terms.
C. C terms.
D. D terms.
ANSWER: A
a
6. Incoterm is specific about the responsibility for marine insurance in case of
A. FOB and EXW
B. FOB and CIF.
C. CIF and CIP.
D. CPT and DDP.
ANSWER: C
7. The group of terms arranged in order of increasing responsibility of exporter is.
A. C,D,E and F terms.
B. D,E,F and C terms.
C. E,F,C and D terms.
D. F,C,E and D tenns.
ANSWER: C
8. The price quoted by the seller for the product
A. will vary depending upon the incoterm chosen.
B. irrespective of the incoterm.
C. will be the base price; the effect of incoterm to be added later.
D. will include only cost.
ANSWER: A
9. Adoption of incoterm is
A. compulsory for all international contracts
B. compulsory for all letter of credit transactions.
C. optional for the parties to the contract.
D. mandatory for transactions with Europe.
ANSWER: C
10. Which of the following term cannot be used for transportation of goods by Road or Air?
A. FAS.
B. DDR
C. EXW.
D. CIR
ANSWER: A
11. Packing credit is
A. an advance made for packing goods for export.
B. pre-shipment finance for export.
C. a priority sector advance.
D. advance for importer.
ANSWER: B
12. The amount of packing credit should not normally exceed
A. the local cost of manufacture for the exporter.
B. FOB value of the export contract.
C. CIF value of the export contract.
D. the cost of manufacture or FOB value of the export contract whichever is less.
ANSWER: D
13. Which of the following person is not eligible for packing credit?
A. a .merchant exporter.
B. a person making deemed exports.
C. sub-suppliers to manufacture exporter.
D. supplier to sub-supplier to manufacture exporter.
ANSWER: D
14. The running account facility for packing credit is available for
A. status holders only.
B. export for specified goods.
C. exporters with good track record
D. exporters with orders above Rs. 100 crores.
ANSWER: C
15. The advantage to the exporter of running account facility of packing credit is
A. production of letter of credit or firm order is completely waive
B. the period of facility need not be adhered to.
C. production of letter credit on firm order is waived immediately they must be produced within
reasonable time.
D. the rate of interest is low.
ANSWER: C
16. The exemption from the condition credit should not exceed domestic cost of production is not waived
for
A. commodity eligible for duty drawback.
B. commodity imported under advance licence
C. HPS groundnuts.
D. agro based productions like tobacco.
ANSWER: B
17. The substitution of commodity/fresh export of adjustment of packing credit is not available for
A. advance against sensitive commodities.
B. transactions of sister/associate/group concerns.
C. exports availing running account facility.
D. exports with imports.
ANSWER: B
18. Normally the maximum period for which packing credit advances are made is
A. 90 days.
B. 135 days.
C. 180 days.
D. 360 days.
ANSWER: C
19. A pre-shipment advance is not expected to be adjusted by
A. proceeds of export bill
B. export incentives.
C. post-shipment finance.
D. local funds.
ANSWER: D
20. A packing credit was granted against an export order but the export could not take place
A. It should be reported to the RBI
B. The exporter should be black list
C. Claim should be preferred with ECG
D. Interest at domestic rate should be charged on the advance from the date of advance
ANSWER: D
21. 2 For direct export the packing credit should normally be granted only against
A. a letter of credit.
B. firm order.
C. export licence.
D. a letter of credit or firm order.
ANSWER: D
22. For packing credit in rupees the interest of period up to 180 days is chargeable at
A. BPLR minus 2.5%.
B. BPLR minus 3%.
C. not exceeding BPLR minus 2.5%.
D. not less than BPLR minus 2.5%.
ANSWER: C
23. Pre-shipment credit in foreign currency is available for a period of
A. maximum 180 days.
B. minimum 180 days.
C. maximum 270 days.
D. maximum 360 days.
ANSWER: A
24. Pre-shipment credit in foreign currency can be availed in
A. US Dolor only.
B. the currency of export only.
C. the currency of import only.
D. any permitted currency.
ANSWER: D
25. Advising of letter ofcredit will be done by the bank
A. only to its customers
B. to any person provided the letter of the credit is issued by its correspondent bank.
C. free of charge to its customers and for a cost to others.
D. to any beneficiary and from any issuing bank.
ANSWER: B
26. The following is not a post-shipment advance
A. negotiation of bill under letter of credit
B. purchase of foreign bill.
C. advance against foreign bill for collection
D. packing credit.
ANSWER: D
27. A bill drawn under a letter of credit contains discrepancies
A. the bank should refuse to negotiate documents
B. take the bill on collection basis only.
C. must negotiate irrespective of discrepancies
D. may purchase it or take it for collection, but should not refuse to handle the bill.
ANSWER: D
28. If an export bill which was purchased /negotiated is not realized within reasonable time from the due
date the bank should
A. reserve the bill from the export bill purchase portfolio.
B. make a claim with ECGC
C. report to RBI.
D. take further bills from the exporter only on collection basis.
ANSWER: A
29. The following is a must for an exporter
A. GR form.
B. EP form.
C. PP form.
D. GRX form.
ANSWER: C
30. Duty drawback is the refund of duty chargeable on
A. Exported material
B. Imported material
C. Damaged material
D. Exports to Indian owned warehouses in Europe.
ANSWER: B
31. Availing post-shipment credit in foreign currency is compulsory for
A. exporters who have not availed packing credit.
B. all exporters who have availed packing credit.
C. exporters who have availed pre-shipment credit in foreign currency.
D. exporters who have availed credit from banks.
ANSWER: C
32. Post-shipment credit in foreign currency can be availed by
A. use of on-shore foreign currency funds
B. banks raising foreign currency funds abroad
C. exporters arranging funds abroad
D. any of the above methods.
ANSWER: D
33. Advance remittance from importer can be accepted by an exporter in India provided
A. the advance does not carry interest payment.
B. shipment will be made only after one year from the date of receipt of advance.
C. advance does not exceed 25% of export value.
D. rate of interest,if payable, does not exceed Libor plus 1%.
ANSWER: D
34. A bank may refuse to accept an export bill for collection
A. when the customer has sufficient limits under bill discounting facility.
B. when the documents have discrepancies when compared to letter of credit requirements.
C. when the documents are received from a non customer
D. when the documents are received from a customer.
ANSWER: C
35. . If the importer refuses to accept the bill drawn on him the exporter
A. should reimport the goods.
B. must find an alternate buyer.
C. may reimport or sell to an alternate buyer depending upon commercial expediency
D. sue the importer.
ANSWER: C
36. If export cargo is lost in transit, the exporter should
A. claim under marine insurance.
B. claim with ECGC
C. seek write off of post-shipment credit.
D. seek refund of customs duty.
ANSWER: A
37. Pre-shipment rupee credit from Exim bank is available for
A. period upto 180 days.
B. period beyond 180 days.
C. trunkey proects only.
D. foreign currency components only.
ANSWER: B
38. For export oriented units, Exim bank finances
A. term loans only.
B. both working capital and term loans.
C. term loans, working capital and long term working capital.
D. for investment from overseas.
ANSWER: C
39. Which of the following is not a common feature of direct lending by Exim bank?
A. They are for medium or long term.
B. The size of the loan is high.
C. Security is not insisted upon.
D. Interest rates are relatively low.
ANSWER: C
40. Bid Bond issued as part of
A. Turnkey project
B. Post award clearance
C. supply bidding process
D. Deferred Payment
ANSWER: C
41. Exim bank lending to foreign governments take the form of
A. soft loans.
B. commercial loans.
C. lines of credit.
D. relending facility.
ANSWER: C
42. The facility that is available to commercial banks in India from Exim bank is
A. refinancing of export credit.
B. export bill re-discounting.
C. syndication of export credit risks.
D. all the above.
ANSWER: D
43. Exim bank issues guarantees on behalf of
A. all exporters from India.
B. exporters of construction and turnkey projects
C. banks in India.
D. Govt, of India.
ANSWER: B
44. Exim bank issues guarantees to commercial for
A. all export advances
B. all export advances repayable beyond one year.
C. post-shipment suppliers credit from one year to three years.
D. loans with refinance from Exim bank.
ANSWER: C
45. Export factoring is available for
A. short term exports.
B. medium term exports.
C. all exports.
D. export under consignment basis.
ANSWER: A
46. Which of the following service is not provided by an export factor?
A. invoice discounting.
B. providing credit information.
C. maintenance of debtors account.
D. none of the above.
ANSWER: D
47. Export factoring encourages the following method of payment
A. open account system.
B. letter of credit method
C. documentary bill.
D. advance payment.
ANSWER: A
48. Factoring refers to.
A. discounting of any export bill.
B. discounting of medium term export bill.
C. writing off unrealized export bill.
D. waiver of charges on export bills.
ANSWER: B
49. Under supplier's credit for deferred payment exports scheme of Exim bank
A. pre-shipment finance is available for periods beyond 180 days
B. post-shipment finance is available in Indian rupees for deferred payment exports.
C. post-shipment finance is available in foreign currency for deferred payment exports.
D. post-shipment finance is available in Indian rupees or foreign currency for deferred payment exports.
ANSWER: A
50. Which of the following statements relating to consultancy and technology services finance programme
of Exim bank is wrong?
A. The exporter is expected to get an advance payment of 25%
B. The export should be covered byECGC policy.
C. Minimum period of the loan is seven years.
D. They should be secured by a government guarantee or letter of credit.
ANSWER: C
51. Pre-shipment credit is available from Exim bank is available for
A. period up to 180 days.
B. period beyond 180 days.
C. turnkey projects only.
D. foreign currency component only.
ANSWER: B
52. Extension period of credit for export
A. 180 days
B. 90 days
C. 220 days
D. 270 days
ANSWER: B
53. Which of the following is not a common feature of direct lending by Exm bank?
A. They are for medium or long term.
B. The size of the loan is high.
C. Security is not insisted upon.
D. Interest rates are relatively large.
ANSWER: C
54. The standard policy of ECGC covers the risk of
A. buyers failure to obtain import lisence
B. insolvency of the collecting bank
C. cancellation of the import licence in the buyers country.
D. all the above.
ANSWER: C
55. The standard policy of ECGC is issued
A. 90% for political risk and 60% for commercial risk.
B. 90% for both political and commercial risk.
C. 60% for political risk and 90% for commercial risk.
D. 60% for both political and commercial risk.
ANSWER: B
56. Loans above Rs 50 crores need clearance from
A. RBI, EXIM Bank, ECGC
B. RBI
C. EXIM Bank
D. ECGC
ANSWER: A
57. The small exporter's policy of ECGC is issued to
A. any exporter in the SSI category
B. any exporter who is exempt from excise duty.
C. an exporter with expected turnover of Rs. lcrore.
D. an exporter with an anticipated turnover in the next twelve months not exceeding of Rs. 50 lakhs.
ANSWER: D
58. Which of the following information about the small exporter's policy is wrong?
A. Risk coverage is 95% for commercial risks and 100% for political risk.
B. The policy issued for 12 months.
C. The premium payable is less than standard policy.
D. None of the above.
ANSWER: D
59. The maturity factoring facility of ECGC protects the exporters against
A. failure of the buyer to obtain authority as per the regulations of his country.
B. risk normally covered by General Insurance.
C. failure of the buyer to pay.
D. none of the above.
ANSWER: C
60. Cover under the guarantee of ECGC is available to
A. the bank against the default of the importer.
B. the bank against the default of the exporter.
C. the bank against the default of the importer and exporter.
D. the exporter against the default of the importer.
ANSWER: B
61. Pre-shipment advances granted in excess of FOB value of contract against duty drawback can be
covered under
A. packing credit guarantee
B. whole turnover packing credit guarantee.
C. export production finance guarantee.
D. export finance guarantee.
ANSWER: C
62. Export finance guarantee of ECGC protects
A. banks providing foreign currency loans to correspondents.
B. banks providing foreign currency loans to contractors.
C. overseas branches financing Indian exports.
D. overseas branches financing Indian imports.
ANSWER: B
63. Pre-shipment advances against export incentives can be covered under
A. post shipment export credit guarantee
B. whole turnover post shipment credit guarantee
C. export production finance guarantee.
D. export finance guarantee.
ANSWER: D
64. The rate of premium payable to ECGC for eligible advances covered under whole turnover packing
credit guarantee is
A. 6 paise per Rs.100 p. on daily average products
B. 6 paise per Rs.100 p.m. on daily average products.
C. 6 paise per Rs.100 p. on monthly average products.
D. 6 paise per Rs.100 p. on yearly average products.
ANSWER: A
65. The risk to a bank in confirming a letter of credit is covered by ECGC under
A. export performance guarantee
B. transfer guarantee.
C. export finance guarantee.
D. import and export finance guarantee.
ANSWER: B
66. Linder exchange fluctuation risk cover , the ECGC provides cover
A. to the exporters on deferred payment terms against exchange fluctuations.
B. to banks for advances made in foreign currency to importers abroad
C. to banks against advances made deferred payment export.
D. to banks for advances made in foreign currency to importers and exporters abroad
ANSWER: A
67. Working group consist of
A. RBI, ECGC and EXIM Bank
B. RBI
C. ECGC and EXIM Bank
D. EXIM and Commercial Baks
ANSWER: A
68. The percentage of contract value the exporter can avail as advance from importer
A. 15%
B. 25%
C. 30%
D. 35%
ANSWER: A
69. Commodity Boards do not differ from Export Promotion Councils in respect of the following
A. Commodity Boards deal with problems relating to production also.
B. Commodity Board is a statutory body.
C. Commodity Board covers a specific product.
D. None of the above.
ANSWER: C
70. . Which of the following organization does not specialize in training activity?
A. Indian institute of Foreign Trade.
B. Indian Trade Promotion Organization.
C. Indian Institute of Packaging.
D. None of the above.
ANSWER: B
71. The institution specializing in organizing fairs and exhibitions is
A. Indian Institute of Foreign Trade.
B. Federation of Indian Export Organization.
C. Indian trade Promotion Organization.
D. None of the above.
ANSWER: C
72. Funds allocated under ASIDE should be used for
A. developing infrastructure such as roads.
B. creation of free trade zone.
C. advertisements abroad
D. conducting trade tours.
ANSWER: A
73. The red clause letter of credit is also known as
A. Stand by credit
B. Anticipatory credit
C. Automatic credit
D. Back to Back credit
ANSWER: B
74. Duty drawback is available for
A. import duty on imported components.
B. central excess on indigenous companies.
C. both (a ) and (b) above.
D. (c) above and VAT.
ANSWER: C
75. Excise duty exemption on exports is available for duty paid on
A. finished products only.
B. components only.
C. finished products and components.
D. imported item.
ANSWER: C
76. Submission to the bank of the bill of entry as evidence of import is mandatory where the value of
import exceeds
A. USD 10,000.
B. USD 25,000.
C. USD 1,00,000.
D. USD 1,00,000 in a year.
ANSWER: C
77. A bank receives for collection a bill drawn on an importer who is not it's customer, for retirement of
the bill, the bank
A. can accept payment in cash
B. should forward the bill to the importer's bank for delivery of documents
C. can accept cheque drawn by the importer on his bank.
D. can accept cheque drawn in the favor of the importer duly endorsed in bank's favor.
ANSWER: C
78. The currency in which payment for import is made depends upon
A. The country from which the goods are shipped
B. The country of origin of goods.
C. The arrangement between the buyer and seller.
D. The bank which the importer's bank has correspondent relationship.
ANSWER: A
79. The advance remittance against imports is subject to the conditions
A. the amount should not excess USD 25000.
B. it should earn interest at LIBOR.
C. the import should be capital goods.
D. none of the above.
ANSWER: D
80. Import license are required
A. for all imports.
B. for all capital imports.
C. import of goods covered by negative list.
D. none of the above.
ANSWER: C
81. A bank opening a letter credit gets charge over the imported goods till payment is made by the
importer under the provisions of
A. application for the credit
B. the letter of credit.
C. the sale contract.
D. the import licence.
ANSWER: A
82. The maximum period of credit fixed by RBI depends on
A. Anticipated life of export goods
B. Extent of foreign competition
C. Nature of the foreign market
D. All the above
ANSWER: D
83. For deferred payment import remission should be sought from the Reserve Bank when
A. the period of credit beyond one user.
B. the imports in a year exceeds USD 20 millions.
C. the imports per transaction exceeds USD 20 millions.
D. all in the cost borrowing exceeds LIBOR.
ANSWER: C
84. Standby letters of credit can be used by authorized dealers in India for
A. exporters liability on account of exports from India.
B. selective importers
C. both A and B above.
D. none.
ANSWER: C
85. An exporter cannot obtain details about prospective buyers from
A. yellow pages.
B. web sites.
C. Indian embassy abroad
D. none of the above.
ANSWER: D
86. Under advance remittance as a method of payment the credit risk is borne by
A. the importer.
B. the exporter.
C. importer's bank.
D. none.
ANSWER: A
87. Open account was used as a method of payment indicates
A. the transactions are legal.
B. the buyer has no money to pay immediately.
C. the seller wants to sell desparately.
D. none of the above.
ANSWER: D
88. Open account method of payment is beneficial to
A. the buyer
B. the seller.
C. the buying agent.
D. both the buyer and seller.
ANSWER: A
89. Cash on delivery method is normally used for
A. bulk cargo with immediate market
B. slow moving terms.
C. small but valuable items sent by post.
D. exports to countries with balance of payments problem
ANSWER: C
90. Documents against payment term indicates
A. the documents are sent by post.
B. the export is risky.
C. the collecting bank will hand the documents to the buyer against payment.
D. the exporter delivers the documents to the bank against advance.
ANSWER: C
91. The best form of method of payment for an importer would be
A. advance remittance.
B. letter of credit.
C. documents against payment.
D. open account.
ANSWER: D
92. When goods are sent to an agent of an exporter in the importing country, the method of payment
adopted is
A. open account.
B. letter of credit.
C. consignment sale.
D. document against acceptance.
ANSWER: C
93. The method of payment where the exporter relies on the undertaking of a bank to pay is.
A. bank guarantee
B. letter of credit.
C. letter of comfort.
D. none of the above.
ANSWER: B
94. Letter of credit transactions are generally governed by the provisions of
A. Uniform customs and Procedures for Documentary Credits.
B. United Conference on Practices for Documentary Credits.
C. Uniform Customs and Practice for Documentary Credits
D. Uniform Code and Procedure for Documentary Credits.
ANSWER: C
95. The beneficiary under a letter of credit is
A. the bank opening the credit.
B. the customer of the opening bank.
C. the confirming bank.
D. the exporter.
ANSWER: D
96. A letter of credit is opened on behalf of
A. exporter customers.
B. importer customers.
C. any party wishing to make payment abroad
D. none of the above.
ANSWER: B
97. A letter of credit is addressed to
A. the beneficiary.
B. the negotiating bank.
C. the reimbursing bank.
D. none.
ANSWER: A
98. A letter of credit that provides for granting of pre-shipment finance as well as storage of goods in the
name of the bank is
A. a red clause letter of credit
B. a standby letter of credit.
C. a green clause letter of credit.
D. a secured letter of credit.
ANSWER: C
99. When a letter of credit does not indicate whether it is revocable or irrevocable, it is treated as
A. revocable
B. irrevocable
C. revocable or irrevocable at the option of the beneficiary.
D. revocable or irrevocable at the option of the negotiating bank.
ANSWER: B
100. Payment for bills drawn under letter of credit should be made by the negotiating bank
A. after the documents are approved by the issuing bank.
B. immediately or on a future date depending upon the terms of credit.
C. only in foreign currency.
D. immediately in all cases.
ANSWER: B
101. Under an acceptance letter of credit, the responsibility of the issuing bank is
A. only to accept the bill
B. to pay against the bill
C. to accept the immediately and also to pay the amount of the bill on its due date.
D. to get the acceptance of the importer on the bill.
ANSWER: C
102. A confirmed letter of credit is one
A. confirmed to be authention
B. confirmed by the importer to be correct.
C. confirmed by the exporter that he agrees to the conditions.
D. confirmed by a bank (other than the opening bank) in the exporter's country.
ANSWER: D
103. Under the confirmed letter of credit the undertaking the confirming bank is
A. in addition to that of the opening bank.
B. in substitution of the undertaking of the opening bank.
C. subject to government policies to the exporter country.
D. none of the above.
ANSWER: A
104. A credit which provides for reinstatement of the amount as and when bills are drawn under it is called
A. reinstatement credit
B. reimbursement credit
C. revolving credit.
D. back-to-back credit.
ANSWER: C
105. Working Group for approval of project exports does not include
A. Reserve Bank of India.
B. Financing bank.
C. Exim bank.
D. DGFT.
ANSWER: D
106. For project exports fulfilling norms for period of credit, in principle sanction can be given by
A. the financing bank.
B. Exim bank.
C. The financing bank for contracts worth up to Rs 25 crores and Exim bank for contracts worth up to
RS 100 crores.
D. the financing bank for contracts worth up to Rs 100 crores and Exin bank for contracts worth up to
Rs 25 crores.
ANSWER: C
107. The following statement with respect to moratorium on repayment of principal on project export is
not correct
A. For capital goods exports the maximum period of moratorium is 1 year.
B. For turnkey project exports the maximum period moratorium is 2 years.
C. For consumer goods export the maximum period moratorium is 3 years.
D. None of the above.
ANSWER: C
108. Export of services on deffered payment terms requires clearance of the Working Group for
A. contracts beyond Rs 5 crores.
B. contracts beyond 10 crores
C. contracts beyond 20 crores
D. all contracts.
ANSWER: D
109. In case of failure of the exporter, the liability of the bank which has issued the performance guarantee
is to
A. compel the exporter to fulfill his obligation.
B. find alternative contractor who can execute the contract
C. financially compensate the beneficiary up to the value of the contract
D. financially compensate the beneficiary up to the guaranteed amount.
ANSWER: D
110. Advance payment guarantee assures
A. the beneficiary that the exporter will make advance payments.
B. the exporter that the importer will make advance payments.
C. the importer to refund the money he has advanced to the exporter, if the latter fails.
D. the exporter that the bank will extend credit for the contract.
ANSWER: C
111. Indian parties are prohibited from making investment in foreign entity engaged in the business of
A. real estate.
B. real estate or banking.
C. real estate or banking or agriculture.
D. none of the above.
ANSWER: B
112. Direct investment in a joint venture abroad can be made by an Indian party with ceiling on limit under
automatic route if the investment is made from
A. balances in EEFC account
B. funds raised through ADR/GDR.
C. balances in EEFC account or funds raised through ADR/GDR.
D. no such provision.
ANSWER: C
113. Which of the following is not an approved method of funding direct investment in a foreigh joint
venture?
A. Capitalisation of reserves
B. Issusing shares in foreign market.
C. Swap of shares.
D. Utilisation of ECB proceeds.
ANSWER: B
114. An Indian entity which has made direct investment abroad is not required to
A. repatriate to India the dues receivable from foreign entity.
B. submit annual performance report to Reserve Bank.
C. ensure return on investment is not less than the prime rate in the country of investment.
D. none of the above.
ANSWER: C
115. Export Credit Guarantee Corporation(ECGC) policies do not cover risk against
A. buyer's protracted default to pay for the goods.
B. war in buyer's country.
C. buyer's failure to obtain necessary import licence or exchange authorization from authorities in his
country.
D. cancellation of export licence.
ANSWER: C
116. The standard policy of ECGC covers risk of
A. buyer's failure to obtain import licence.
B. insolvency of the collecting bank.
C. cancellation of import licence in the buyer's country.
D. all the above.
ANSWER: C
117. The standard policy of ECGC protects loss to the extent of
A. 90% for political risk and 60% for commercial risk.
B. 90% for both political and commercial risks.
C. 60% for political risk and 90% for commercial risk.
D. 60% for both political and commercial risks.
ANSWER: B
118. The maximum amount of claim against an individual buyer that ECGC will accept under its standard
policy issued to an exporter is known as
A. maximum liability.
B. credit limit.
C. individual limit.
D. there is no such ceiling.
ANSWER: B
119. The standard policy of ECGC is issued
A. on whole turnover basis for 24 months.
B. on whole turnover for 12 months.
C. against each consignment separately.
D. on monthly basis.
ANSWER: A
120. Funds allocated under ASIDE should be used for
A. developing infrastructure such as roads.
B. creation of free trade zones
C. advertisements abroad
D. conducting trade tours.
ANSWER: A
121. Unless prohibited by letter of credit, a bank can accept
A. claused bill of lading.
B. received for shipment bill of lading.
C. bill of lading indicating that the carrying vessel is propelled by sail only
D. none of the above.
ANSWER: D
122. Market access initiative is not available for
A. conducting market studies
B. participation in international trade fairs
C. Testing charges for engineering products
D. None of the above
ANSWER: D
123. Guarantee credit is other name for
A. back to back credit
B. anticipatory credit
C. standby credit
D. Automatic credit
ANSWER: C
124. Amendment to a letter of credit should be advised through the
A. negotiating bank
B. advising bank.
C. issuing bank
D. none of the above.
ANSWER: B
125. 19 A guarantee issued by a bank in lieu of bid money to be deposited by the exporter to participate in
the tender is a
A. bid bond guarantee
B. performance guarantee.
C. advance payment guarantee
D. retention money guarantee.
ANSWER: A
126. A guarantee issued in favour of an importer so that he releases entire contract amount instead of
retaining a portion is
A. performance guarantee
B. retention money guarantee.
C. bid bond guarantee.
D. advance payment guarantee.
ANSWER: B
127. For export guarantees issued a bank may obtain cover from ECGC under its
A. export performance guarantee.
B. retention money guarantee.
C. bid bond guarantee.
D. advance payment guarantee.
ANSWER: A
128. The statutory basis for regulation of foreign trade in India is
A. Foreign Trade( Development and Regulation) Act.
B. Foreign Exchange Management Act.
C. Customs Act.
D. Director General of Foreign Trade.
ANSWER: A
129. Two parties agreeing to buy and sell from each other without involving payment is known as
A. Domestic trade.
B. foreign trade.
C. Countertrade.
D. non paying trade.
ANSWER: C
130. Banks can permit reduction in value of export bills up to
A. 1%.
B. 2%.
C. 5%.
D. 10%.
ANSWER: D
131. Undrawn balance on export bills are permitted up to
A. 10%
B. 15%
C. 5%
D. 2%
ANSWER: A
132. For imports from Pakistan, payment should be made in
A. US dollars.
B. Indian Rupee.
C. Pakistan currency.
D. any currency.
ANSWER: A
133. The time limit for export realization
A. is 2 months from the date of shipment.
B. is 3 months from the date of shipment
C. is 4 months from the date of shipment.
D. is 6 months from the date of shipment.
ANSWER: D
134. Comprehensive risk policy covers
A. only commercial risk.
B. only political risk.
C. both commercial and political risk
D. none of the above.
ANSWER: C
135. 21 Export turnover policy is for
A. large exporters who pay not less than Rs 10 lakhs per annum towards premium
B. large exporters who pay not less than 25 lakhs per annum towards premium.
C. small exports who pay less than 10 lakhs per annum.
D. small exporters who pay more than 10 lakhs premium per annum.
ANSWER: A
136. Which one of the following statements relating to Consultancy and Technology Services Finance
Programme of Exim Bank is Wrong?
A. The exporter is expected to get an advance payment of 25%.
B. The export should be covered by ECGC policy.
C. Minimum period of loan is seven years.
D. They should be secured by a government guarantee or letter of credit.
ANSWER: C
137. For Export Oriented Units, Exim Bank finances
A. . term loans only.
B. both working capital and term loans.
C. term loans, working capital as long term working capital.
D. only investment overseas.
ANSWER: C
138. Which one of the following is not a common features of direct lending by Exim Bank?
A. They are for medium or long-term.
B. The size of the loan is high.
C. Security is not insisted upon.
D. Interest rates are relatively low.
ANSWER: C
139. The facility that is available to commercial banks in India from Exim Bank is
A. refinance of export credit.
D. all the above.
ANSWER: D
140. Exim bank issues guarantees on behalf of
A. all exporters from India.
B. exporters of construction and turnkey projects
C. banks in India.
D. Government of India.
ANSWER: B
141. Export factoring encourages the following method of payment
A. open account system
B. letter of credit method
C. documentary bills.
D. advance payment.
ANSWER: A
142. For availing discounting of bills with forfeiter, the exporter should produce
A. avalised bills of exchange or promissory notes accepted by importer's bank
B. avalised bills of exchange or promissory notes accepted by exporter's bank.
C. Reserve Bank permit.
D. no objection certificate from Exim bank.
ANSWER: A
143. Which of the following is not a basic objective of documentation in foreign trade?
A. to assure that the exporter will receive the payment.
B. to assure that the importer will receive the goods.
C. to reduce foreign exchange risk.
D. none of the above.
ANSWER: D
144. Which of the following is not an important document in foreign trade?
A. a check for the value of goods.
B. a draft.
C. bill of lading.
D. a letter of credit.
ANSWER: A
B. export bills rediscounting.
C. syndication of export credit
145. . risk is the potential exchange loss from outstanding obligations as a result of exchange-rate
fluctuations.
A. Trade.
B. Exchange.
C. Finance.
D. Transaction.
ANSWER: D
146. Foreign exchange risk can be reduced by using .
A. forward contracts
B. futures contracts.
C. currency options.
D. all of the above.
ANSWER: D
147. Which of the following is not a condition for drafts to be negotiable?
A. must be in writing, signed by the drawer.
B. must contain a promise to pay a certain sum if goods are receive
C. must contain an order to pay.
D. must be payable on sight or at a specified date.
ANSWER: B
148. . If a draft is made to bearer, payment should be made to .
A. a bank.
B. drawer.
C. acceptor.
D. anyone who presents the draft.
ANSWER: D
149. If a draft is accepted by a bank, it becomes a .
A. valid draft.
B. demand draft
C. usance draft.
D. bankers acceptance.
ANSWER: D
150. Forms of countertrade include the following except .
A. simple barter.
B. clearing arrangement.
C. counter purchase.
D. mutual agreement.
ANSWER: D
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