Trade Mixed-3
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Questions and Answers

What is receivables finance?

  • A type of loan against inventory
  • Selling invoices to unlock cash (correct)
  • A type of distributor finance
  • A form of trade and supply chain financing

    • What is factoring?

  • A type of pre-shipment finance
  • A form of distributor finance
  • Selling bills to a third party at a discount (correct)
  • A type of loan against receivables

    • What is forfaiting?

  • Selling future payment obligations without recourse (correct)
  • A form of pre-shipment finance
  • A type of distributor finance
  • A type of loan against inventory

    • What is a loan or advance against receivables?

    <p>Financing against expected repayment from trade receivables</p> Signup and view all the answers

    What is distributor finance?

    <p>Financing for a distributor to hold goods for resale</p> Signup and view all the answers

    What is pre-shipment finance?

    <p>Credit extended to exporters prior to shipment of goods</p> Signup and view all the answers

    What is the purpose of factoring?

    <p>To raise funds by selling bills at a discount</p> Signup and view all the answers

    What is the security provided in a loan or advance against inventory?

    <p>Inventory held by the distributor</p> Signup and view all the answers

    What is the primary function of a standby letter of credit?

    <p>To provide a guarantee for the applicant's performance</p> Signup and view all the answers

    What is a characteristic of a red clause credit?

    <p>It allows pre-shipment advances to be made to the exporter</p> Signup and view all the answers

    What is the purpose of a standby letter of credit?

    <p>To ensure the performance of the applicant's obligations</p> Signup and view all the answers

    What is the risk associated with standby letters of credit?

    <p>The risk of unfair calling by the beneficiary</p> Signup and view all the answers

    What is required to claim payment under a standby letter of credit?

    <p>A sight draft and a statement issued by the beneficiary</p> Signup and view all the answers

    What is the role of the Confirming Bank in a red clause credit?

    <p>To make advances to the beneficiary before presentation of the documents</p> Signup and view all the answers

    What is the purpose of a red clause credit?

    <p>To allow pre-shipment advances to be made to the exporter</p> Signup and view all the answers

    What can provide protection against unfair calling risks under a standby letter of credit?

    <p>Insurance companies</p> Signup and view all the answers

    What is required for a commercial invoice in Bangladesh when opening a Letter of Credit?

    <p>A signature</p> Signup and view all the answers

    What must be received before payment can be made under a back-to-back LC?

    <p>Bill of Entry</p> Signup and view all the answers

    What is the focus of banks in UCP, according to the text?

    <p>Documents</p> Signup and view all the answers

    What is the relationship between the issuance date of a document and the issuance date of the credit in UCP 600?

    <p>The document date may be prior to the credit date, but not later</p> Signup and view all the answers

    What is the requirement for shipment date in Bangladesh, except for a few cases?

    <p>Shipment date must be after the issuance date of the credit</p> Signup and view all the answers

    What happens if an importer gives a waiver and it is acceptable to the issuing bank?

    <p>Payment is made according to the payment terms of LC</p> Signup and view all the answers

    What is the focus of due diligence in determining bonafide business in acceptance payments?

    <p>Business legitimacy</p> Signup and view all the answers

    What is the requirement for bankers after complying with presentation in UCPDC?

    <p>Make payment according to payment terms</p> Signup and view all the answers

    What is Bangladesh Bank responsible for?

    <p>Framing guidelines governing foreign currency transactions</p> Signup and view all the answers

    What documents do importers and exporters need to submit to the CCI&E of the Ministry of Commerce?

    <p>A diverse set of documents including Receipt of deposited fees, TIN, VAT, etc.</p> Signup and view all the answers

    Who designed formats of standard purchase/sale agreement?

    <p>ICC and UNCITRAL</p> Signup and view all the answers

    What is the purpose of authorized dealers maintaining adequate records?

    <p>To furnish the particulars in the prescribed formats</p> Signup and view all the answers

    Under which Act can Bangladesh Bank call for information and inspect?

    <p>FERA 1947</p> Signup and view all the answers

    What is the purpose of Section 5, 8, and 12 of the FERA 1947?

    <p>Specifically important and relevant for trade services by banks</p> Signup and view all the answers

    What do authorized dealers need to follow?

    <p>Both Foreign Exchange (FE) circulars and Export Policy and Import Policy Order</p> Signup and view all the answers

    Who issues circulars/guidelines to regulate trade payment and international banking activities?

    <p>Bangladesh Bank</p> Signup and view all the answers

    What does documentary collection provide?

    <p>A payment tool with documents against payment and documents against acceptance techniques</p> Signup and view all the answers

    What is a Bank Payment Obligation (BPO)?

    <p>A payment tool offering a level of security similar to that of Letter of Credit</p> Signup and view all the answers

    What is the objective of Supply Chain Financing (SCF)?

    <p>To facilitate payments and financing within supply chain of enterprises</p> Signup and view all the answers

    What is international factoring used for?

    <p>Handling risk in open account trade</p> Signup and view all the answers

    What is forfaiting used for?

    <p>Purchasing obligations falling due at some future date</p> Signup and view all the answers

    What is factoring suitable for?

    <p>Financing smaller claims for consumer goods</p> Signup and view all the answers

    What is a limitation in measuring the use of different trade payment and financing techniques?

    <p>Lack of uniform data</p> Signup and view all the answers

    What does a Bank Payment Obligation (BPO) offer?

    <p>A level of security similar to that of Letter of Credit</p> Signup and view all the answers

    What is the primary advantage of a documentary credit in international trade?

    <p>It assures the buyer and seller of payment and delivery, respectively, through the involvement of third-party banks</p> Signup and view all the answers

    What is the role of the advising/confirming bank in a documentary credit transaction?

    <p>To inform the seller that the letter of credit has been issued and add its confirmation to the credit</p> Signup and view all the answers

    What is the purpose of the Uniform Customs and Practice for Documentary Credits (UCP-600)?

    <p>To standardize the procedures for documentary credits</p> Signup and view all the answers

    What is the key difference between a revocable credit and an irrevocable credit?

    <p>The ability to amend or cancel the credit without prior notice</p> Signup and view all the answers

    What is the primary reason why documentary credits are the most popular mode of payment in international trade?

    <p>They offer a high level of assurance to both the buyer and seller</p> Signup and view all the answers

    What is the role of the issuing bank in a documentary credit transaction?

    <p>To issue the letter of credit on behalf of the buyer</p> Signup and view all the answers

    What is the primary benefit of incorporating the UCP rules into a documentary credit?

    <p>It offers legal security to the involved parties</p> Signup and view all the answers

    What is the primary characteristic of an irrevocable credit?

    <p>It constitutes a definite undertaking of the issuing bank</p> Signup and view all the answers

    What is a condition for importing goods on CIF or CIP basis without prior approval from the Ministry of Commerce?

    <p>There is a specific provision in the relevant loan agreement or project agreement concluded with the foreign donors</p> Signup and view all the answers

    Which of the following is NOT a change made by ICC to the Incoterms 2010 rules in the Incoterms 2020 rules?

    <p>Changes in the Three-Letter Initials for DAT to DAT</p> Signup and view all the answers

    Who must comply with domestic regulations in Bangladesh?

    <p>Banks in the country</p> Signup and view all the answers

    What can import on CIF or CIP basis?

    <p>Ministry of Food and Ministry of Relief and Rehabilitation Management</p> Signup and view all the answers

    What is required for import on CIF or CIP basis?

    <p>Specific provision in the relevant loan agreement or project agreement concluded with the foreign donors</p> Signup and view all the answers

    What is not an example of complying with domestic regulations?

    <p>Complying with international standard banking practice</p> Signup and view all the answers

    Who can send capital machineries & raw materials on CIF or CIP basis?

    <p>Any expatriate Bangladeshi with income earned abroad</p> Signup and view all the answers

    What is a characteristic of Incoterms 2020?

    <p>It has some changes in sellers’ and buyers’ obligations in delivery of the goods</p> Signup and view all the answers

    What is the primary domestic regulation in regulating cross-border banking transactions in Bangladesh?

    <p>Foreign Exchange Regulations Act 1947 (FERA 1947)</p> Signup and view all the answers

    Which international guideline is most relevant to documentary credits in Bangladesh?

    <p>Uniform Customs and Practice for Documentary Credit (UCP 600)</p> Signup and view all the answers

    Which certificate is not required by government ministries for importation?

    <p>IRC</p> Signup and view all the answers

    What is required for importers to import from any sources in Bangladesh?

    <p>IRC (Import Registration Certificate)</p> Signup and view all the answers

    What is the purpose of Bangladesh Bank in framing guidelines for foreign exchange transactions?

    <p>All of the above</p> Signup and view all the answers

    What is the role of the Chief Controller of Export and Import in the Ministry of Commerce?

    <p>To issue Export Policy and Import Policy Order</p> Signup and view all the answers

    What is the purpose of the International Chamber of Commerce (ICC) publications in Bangladesh?

    <p>To provide guidelines for international trade services</p> Signup and view all the answers

    What is the relevance of Section 5, 8, and 12 of the FERA 1947 to trade services by banks?

    <p>They are specifically important for trade payment and international banking activities</p> Signup and view all the answers

    Which regulation is indirectly related to international trade services in Bangladesh?

    <p>Customs Act 1969</p> Signup and view all the answers

    What is the purpose of the Export Policy 2018-2021 in Bangladesh?

    <p>To regulate trade policies</p> Signup and view all the answers

    What is the purpose of authorized dealers submitting regular monthly returns to the Bangladesh Bank?

    <p>To furnish particulars in the prescribed formats</p> Signup and view all the answers

    Which international guideline is related to Bank-to-Bank Reimbursements for Documentary Credits in Bangladesh?

    <p>Uniform Rules for Bank-to-Bank Reimbursements for Documentary Credits (URR 725)</p> Signup and view all the answers

    What is the authority empowered by the FERA 1947 to regulate trade payment and international banking activities?

    <p>Bangladesh Bank</p> Signup and view all the answers

    What is the requirement for importers and exporters submitting documents to the CCI&E of the Ministry of Commerce?

    <p>They must submit a diverse set of documents</p> Signup and view all the answers

    What is the purpose of the Ministry of Commerce in regulating international trade services in Bangladesh?

    <p>To issue trade policies</p> Signup and view all the answers

    What is the purpose of the Bangladesh Bank's authority to call for information and inspect?

    <p>To regulate trade payment and international banking activities</p> Signup and view all the answers

    What is the primary reason for examining transport documents in a documentary credit?

    <p>To identify common discrepancies in transport documents</p> Signup and view all the answers

    Which of the following is NOT a common discrepancy in transport documents?

    <p>The goods are shipped in a container</p> Signup and view all the answers

    What is the purpose of an on-board notation on the bill of lading?

    <p>To evidence the named vessel or actual port of loading</p> Signup and view all the answers

    What is meant by a contract of indemnity in the context of insurance?

    <p>A contract that provides compensation for losses</p> Signup and view all the answers

    What is the purpose of a policy in insurance?

    <p>To document the contract of indemnity</p> Signup and view all the answers

    What happens if the documentary credit specifically prohibits transshipment and excludes sub-articles 20(c)(ii), 21(c)(ii), or 23(c)(ii)?

    <p>The transport document is rejected</p> Signup and view all the answers

    What is the consequence of presenting a claused bill of lading showing defective condition of the packages or goods?

    <p>The bill of lading is rejected</p> Signup and view all the answers

    What is the purpose of identifying the name of the carrier in transport documents?

    <p>To determine the liability of the carrier</p> Signup and view all the answers

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