Chapter 12 Review Questions

Let us see how much you have learned in this chapter by going over these review questions.

  1. Who opens a letter of credit?
    1. Applicant
    2. Beneficiary
    3. Confirming Bank
    4. Opening Bank
    5. Paying Bank

  2. What is the riskiest payment term from the seller's perspective?
    1. Consignment
    2. Documentary Collection Against Payment
    3. Letter Of Credit
    4. Minimum Guarantee
    5. Payment In Advance

  3. From the seller's perspective, which is the best type of letter of credit?
    1. Irrevocable, at sight, and advised.
    2. Irrevocable, at sight, and confirmed.
    3. Revocable, at sight, and advised.
    4. Revocable, at sight, and confirmed.
    5. Revocable, usance, negotiation, and advised.

  4. What is an open account?
    1. It is a letter of credit that has been opened.
    2. It is a letter of credit that has not yet been paid.
    3. It is an unsecured credit extended to the buyer.
    4. It is the closest international equivalent to cash on delivery.
    5. It is when the exporter opens an account at a bank for an overseas reseller.
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© 2004 John Michael Pierobon

Notes