Payment Methods for International Transactions/Assessment
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Unit 3.4-Payment Methods for International Transactions |
Introduction | Methods of Payment | Comparing Methods | Summary | Resources | Activities | Assessment |
Assessment
1. The method of payment that carries the greatest risk for the exporter is
- a. cash in advance.
- b. letter of credit.
- c. documentary collection.
- d. open account.
2. The method of payment that carries the greatest risk for the importer is
- a. cash in advance.
- b. open account.
- c. letter of credit.
- d. documentary collection.
3. When shipping under a letter of credit the exporter is guaranteed payment when
- a. the importer has received and inspected the goods at the port of import.
- b. the exporter has complied with all terms and conditions as specified in the letter of credit.
- c. the exporter has shipped the product and the bill of lading notes it as clean.
- d. the importer advises the bank that the funds can be safely transferred to the exporter.
4. A documentary collection differs from a letter of credit in that
- a. the exporter does not send the documents to a bank.
- b. the importer does not receive the documents for a bank.
- c. the fees for a documentary collection are greater than for a letter of credit.
- d. the exporter cannot transfer risk to a banking institution.
(Correct answers: 1=d, 2=a, 3=b, 4=d.)
