Question :
71.A _____ issued by a bank, and it indicates that : 1299462
71.A _____ is issued by a bank, and it indicates that the bank will make payments under specific circumstances.
A. bill of exchange
B. bill of lading
C. letter of credit
D. time draft
E. usance draft
72.Which of the following is true of a letter of credit?
A. It states that the bank will pay a specified sum of money to a beneficiary on presentation of particular, specified documents.
B. It is a document written by an exporter instructing an importer to pay a specified amount of money at a specified time.
C. It serves as a receipt, a contract, and a document of title.
D. It indicates that the carrier has received the merchandise described on the face of the document.
E. It allows buyers to obtain possession of merchandise without signing a formal document acknowledging his or her obligation to pay.
73.Which of the following is true of a letter of credit in international trade?
A. No cash deposit or collateral is required from the importer.
B. The exporter pays the trusted third party (usually a bank) a fee for the service.
C. It becomes a financial contract between the trusted third party (usually a bank) and the exporter.
D. It is issued by the exporter at the request of the importer.
E. The creditworthiness of the importer is irrelevant when issuing a letter of credit.
74.Which of the following is an advantage of having a letter of credit?
A. It allows payment for merchandise after its delivery.
B. It facilitates an exporter to obtain pre-export financing.
C. It allows an exporter to get a higher price for his or her goods.
D. It helps exporters incur lower shipping costs.
E. It does not require the importer to pay any fee.
75.Which of the following is an advantage of a letter of credit for an importer?
A. The importer does not have to pay for the merchandise until the documents have arrived.
B. Obtaining pre-export financing becomes easier.
C. It helps the importer to get goods for a lower price.
D. It results in lower shipping costs.
E. The importer does not have to pay the third party a fee for facilitating the transaction.
76.For an importer, which of the following is a disadvantage of using a letter of credit for international transactions?
A. It results in the importer losing control over the process of trading.
B. It reduces the exporter’s level of trust in the importer.
C. It reduces the importer’s ability to borrow funds for other purposes.
D. It requires the importer to repay the loan even before the merchandise is sold.
E. It is not issued at the importer’s request.
77.A letter of credit reduces an importer’s ability to borrow funds for other purposes because:
A. the importer has to request for it.
B. it is a financial liability against the importer.
C. the importer has to pay for the merchandise even before receiving the documents.
D. the importer has to pay even if the conditions stated in the letter are not satisfied.
E. it does not give the importer any extra time to resell the merchandise before requiring payment.
78.In international commerce, a draft is sometimes referred to as a _____.
A. bill of exchange
B. letter of credit
C. bill of lading
D. counterpurchase
E. buyback
79.In international commerce, a _____ refers to an order written by an exporter instructing an importer to pay a specified amount of money at a specified time.
A. bill of lading
B. draft
C. letter of credit
D. counterpurchase
E. buyback
80.Which of the following is true with respect to the international and domestic practices of settling trade transactions?
A. In an international transaction, a formal promise to pay is required before the buyer can obtain the merchandise.
B. In an international transaction, the seller usually ships merchandise on an open account.
C. In a domestic transaction, a draft is used to settle trade transactions.
D. In an international transaction, the exporter sends a commercial invoice that specifies the amount due and the terms of payment to the importer.
E. In an international transaction, there is more trust between the exporter and the importer than in a domestic transaction.
