This is a mode of performance guarantee issued by the bank for and on behalf of its client in favor of another entity (e.g. supplier, service provider, technology transfer, etc.) for the satisfaction and fulfillment of a given obligation under a specific agreement or contract.

A.) Usance LC B.) Sight LC C.) Domestic LC D.) Stand-by LC

Negotiation commences when all export documents specified under the LC have been collated and submitted to the importer's bank, which in turn, reviews the documents before sending it for collection to the exporter's bank

True False

A letter of credit (LC) is an operative document or a letter of notification of a bank to one or more of its correspondent banks, certifying that the person or firm whose name appears therein, is entitled to draw on its credit up to a certain maximum amount under expressed terms and conditions.

True False

This is issued by the importer's bank in such instance wherein the imported goods arrive in advance prior to the prescribed document A.) Letter of Credit B.) Trust Receipt C.) None of the above D.) Bank Guarantee

A trade credit is a business-to-business (B2B) agreement in which a customer can purchase goods on account without paying cash up front, paying the supplier at a later scheduled date.

True False

Trade credit cost refers to the dollar amount of checks or other negotiable instruments that are in the process of collection by a bank, financial institution, or other entity over a certain period, divided by the number of days in the period.True False

Which of the following is not an advantage of a Letter of Credit to the Exporter: A.) Exporter agrees in advance to all requirements for payment under the Letter of Credit. If the Letter of Credit is not issued as agreed, the Exporter is not obligated to ship against it. B.) Documents are prepared and presented in strict compliance with the requirements stipulated in the Letter of Credit for security C.) Importers can easily open Letters of Credit which consequently promotes export growth. D.) Exporter can further reduce foreign political and bank credit risk by requesting confirmation of the Letter of Credit by a Canadian bank.

If the borrower is unable to pay back the borrowed funds, a lender cannot claim the collateral as payment, liquidate the collateral for cash, and use the cash to settle the outstanding debt.

True False

Which of the following are acceptable collaterals and required documents for commercial credit? A.) Trust Receipt B.) Letter of Credit C.) Proof of insurance D.) Term Sheet

How do you interpret this: 2/12 net 30? A.) You get 30% discount on February 12 B.) You get a 2% discount if you pay within 12 days from getting credit and 0% discount if you pay within 30 days C.) You get a 2% and PHP 30 discount if you pay within 12 days from getting credit D.)You get 0.83% discount if you pay within 30 days

It is the feature of a Letter of Credit wherein the issuing bank or the advising bank (or both) adds their guarantee to the LC transaction to eliminate the risk of non-delivery and non-payment of goods. A.) Unconfirmed B.) Confirmed C.) Irrevocable D.) Revocable

A sovereign credit rating is the evaluation of the credit risk of a sovereign entity to determine its ability to pay back debts due. True

False

Which is not part of the process for securing a commercial loan? A.) Pre-approval B.) Qualifying process C.) Review of the loan application D.) Credit amount negotiation