EXIM Finance MCQ Questions and Answers Part – 2

EXIM Finance MCQ Questions and Answers Part – 1

EXIM Finance MCQ Questions and Answers Part – 2

EXIM Finance MCQ Questions and Answers Part – 3

51. Pre-shipment credit is available from Exim bank is available for
A. period up to 180 days.
B. period beyond 180 days.
C. turnkey projects only.
D. foreign currency component only.
ANSWER: B
52. Extension period of credit for export
A. 180 days
B. 220 days
C. 90days
D. 270days
ANSWER: C
53. Which of the following is not a common feature of direct lending by Exim bank?
A. They are for medium or long term.
B. The size of the loan is high.
C. Security is not insisted upon.
D. Interest rates are relatively large.
ANSWER: C
54. The standard policy of ECGC covers the risk of
A. buyers failure to obtain import license
B. insolvency of the collecting bank
C. cancellation of the import licence in the buyers country.
D. all the above.
ANSWER: C
55. The standard policy of ECGC is issued
A. 90% for political risk and 60% for commercial risk.
B. 90% for both political and commercial risk.
C. 60% for political risk and 90% for commercial risk.
D. 60% for both political and commercial risk.
ANSWER: B
56. The ERIC was renamed as
A. ECPC
B. ECGC
C. EACP
D. ECPG
ANSWER: B
57. The small exporter’s policy of ECGC is issued to
A. any exporter in the SSI category
B. any exporter who is exempt from excise duty.
C. an exporter with an expected turnover of Rs. 1crore.
D. an exporter with an anticipated turnover in the next twelve months not exceeding of Rs. 50 lakhs.
ANSWER: D
58. Which of the following information about the small exporter’s policy is wrong?
A. Risk coverage is 95% for commercial risks and 100% for political risk.
B. The policy issued for 12 months.
C. The premium payable is less than the standard policy.
D. None of the above.
ANSWER: D
59. The maturity factoring facility of ECGC protects the exporters against
A. failure of the buyer to obtain authority as per the regulations of his country.
B. risk normally covered by General Insurance.
C. failure of the buyer to pay.
D. none of the above.
ANSWER: C
60. Cover under the guarantee of ECGC is available to
A. the bank against the default of the importer.
B. the bank against the default of the exporter.
C. the bank against the default of the importer and exporter.
D. the exporter against the default of the importer.
ANSWER: B
61. Pre-shipment advances granted in excess of FOB value of contract against duty drawback can be covered under
A. packing credit guarantee
B. whole turnover packing credit guarantee.
C. export production finance guarantee.
D. export finance guarantee.
ANSWER: C
62. Export finance guarantee of ECGC protects
A. banks providing foreign currency loans to correspondents.
B. banks providing foreign currency loans to contractors.
C. overseas branches financing Indian exports.
D. overseas branches financing Indian imports.
ANSWER: B
63. Pre-shipment advances against export incentives can be covered under
A. post-shipment export credit guarantee
B. whole turnover post-shipment credit guarantee
C. export production finance guarantee.
D. export finance guarantee.
ANSWER: D
64. The rate of premium payable to ECGC for eligible advances covered under whole turnover packing credit guarantee is
A. 6 paise per Rs.100 p. on daily average products
B. 6 paise per Rs.100 p.m. on daily average products.
C. 6 paise per Rs.100 p. on monthly average products.
D. 6 paise per Rs.100 p. on yearly average products.
ANSWER: A
65. The risk to a bank in confirming a letter of credit is covered by ECGC under
A. export performance guarantee
B. transfer guarantee.
C. export finance guarantee.
D. import and export finance guarantee.
ANSWER: B
66. Under exchange fluctuation risk cover, the ECGC provides cover
A. to the exporters on deferred payment terms against exchange fluctuations.
B. to banks for advances made in foreign currency to importers abroad
C. to banks against advances made deferred payment export.
D. to banks for advances made in foreign currency to importers and exporters abroad
ANSWER: A
67. Working group consist of
A. RBI
B. EXIM Bank and ECGC
C. RBI, EXIM Bank and ECGC
D. RBI and ECGC
ANSWER: C
68. How many percentage of contract value the exporter can receive as an advance
A. 25%
B. 50%
C. 15%
D. 35%
ANSWER: C
69. Commodity Boards do not differ from Export Promotion Councils in respect of the following
A. Commodity Boards deal with problems relating to production also.
B. Commodity Board is a statutory body.
C. Commodity Board covers a specific product.
D. None of the above.
ANSWER: C
70. A confirmed letter of credit is one
A. Confirmed by bank in the exporters country
B. Confirmed by the importers to be correct
C. confirmed by the exporter that he agrees to the conditions
D. confirmed to be authentic
ANSWER: A
71. The institution specializing in organizing fairs and exhibitions is
A. Indian Institute of Foreign Trade.
B. Federation of Indian Export Organization.
C. Indian trade Promotion Organization.
D. None of the above.
ANSWER: C
72. Funds allocated under ASIDE should be used for
A. developing infrastructure such as roads.
B. creation of free trade zone.
C. advertisements abroad
D. conducting trade tours.
ANSWER: A
73. Market Access Initiative is not available for
A. Conducting market studies.
B. participation in international trade fairs.
C. testing charges for engineering products.
D. none of the above.
ANSWER: D
74. Duty drawback is available for
A. import duty on imported components.
B. central excess on indigenous companies.
C. both (a ) and (b) above.
D. (c) above and VAT.
ANSWER: C
75. Excise duty exemption on exports is available for duty paid on
A. finished products only.
B. components only.
C. finished products and components.
D. imported item.
ANSWER: C
76. Submission to the bank of the bill of entry as evidence of import is mandatory where the value of import exceeds
A. USD 10,000.
B. USD 25,000.
C. USD 1,00,000.
D. USD 1,00,000 in a year.
ANSWER: C
77. A bank receives for collection a bill drawn on an importer who is not it’s customer, for retirement of the bill, the bank
A. can accept payment in cash
B. should forward the bill to the importer’s bank for delivery of documents
C. can accept cheque drawn by the importer on his bank.
D. can accept cheque drawn in the favor of the importer duly endorsed in bank’s favor.
ANSWER: C
78. The currency in which payment for import is made depends upon
A. The country from which the goods are shipped
B. The country of origin of goods.
C. The arrangement between the buyer and seller.
D. The bank which the importer’s bank has correspondent relationship.
ANSWER: A
79. The advance remittance against imports is subject to the conditions
A. the amount should not exceed USD 25000.
B. it should earn interest at LIBOR.
C. the import should be capital goods.
D. none of the above.
ANSWER: D
80. Import license are required
A. for all imports.
B. for all capital imports.
C. import of goods covered by negative list.
D. For all the above.
ANSWER: C
81. A bank opening a letter credit gets charge over the imported goods till payment is made by the importer under the provisions of
A. application for the credit
B. the letter of credit.
C. the sale contract.
D. the import licence.
ANSWER: A
82. The maximum period of credit fixed by RBI depends on
A. Anticipated life of export goods
B. Extent of foreign competition
C. Nature of the foreign market
D. All the above
ANSWER: D
83. For deferred payment import remission should be sought from the Reserve Bank when
A. the period of credit beyond one user.
B. the imports in a year exceeds USD 20 million.
C. the imports per transaction exceeds USD 20 million.
D. all in the cost borrowing exceeds LIBOR.
ANSWER: C
84. Standby letters of credit can be used by authorized dealers in India for
A. exporters liability on account of exports from India.
B. selective importers
C. both A and B above.
D. none.
ANSWER: C
85. An exporter cannot obtain details about prospective buyers from
A. yellow pages.
B. web sites.
C. Indian embassy abroad
D. none of the above.
ANSWER: D
86. Under advance remittance as a method of payment the credit risk is borne by
A. the importer.
B. the exporter.
C. importer’s bank.
D. none.
ANSWER: A
87. Open account was used as a method of payment indicates
A. the transactions are legal.
B. the buyer has no money to pay immediately.
C. the seller wants to sell desperately.
D. none of the above.
ANSWER: D
88. Open account method of payment is beneficial to
A. the buyer
B. the seller.
C. the buying agent.
D. both the buyer and seller.
ANSWER: A
89. Cash on delivery method is normally used for
A. bulk cargo with immediate market
B. slow-moving terms.
C. small but valuable items sent by post.
D. exports to countries with balance of payments problem
ANSWER: C
90. Documents against payment term indicates
A. the documents are sent by post.
B. the export is risky.
C. the collecting bank will hand the documents to the buyer against payment.
D. the exporter delivers the documents to the bank against advance.
ANSWER: C
91. The best form of method of payment for an importer would be
A. open account
B. letter of credit.
C. documents against payment.
D. Advance remittance.
ANSWER: A
92. When goods are sent to an agent of an exporter in the importing country, the method of payment
adopted is
A. open account.
B. letter of credit.
C. consignment sale.
D. document against acceptance.
ANSWER: C
93. The method of payment where the exporter relies on the undertaking of a bank to pay is.
A. bank guarantee
B. letter of credit.
C. letter of comfort.
D. none of the above.
ANSWER: B
94. Letter of credit transactions are generally governed by the provisions of
A. Uniform customs and Procedures for Documentary Credits.
B. United Conference on Practices for Documentary Credits.
C. Uniform Customs and Practice for Documentary Credits
D. Uniform Code and Procedure for Documentary Credits.
ANSWER: C
95. The beneficiary under a letter of credit is
A. the bank opening the credit.
B. the customer of the opening bank.
C. the confirming bank.
D. the exporter.
ANSWER: D
96. A letter of credit is opened on behalf of
A. exporter customers.
B. importer customers.
C. any party wishing to make payment abroad
D. none of the above.
ANSWER: B
97. A letter of credit is addressed to
A. the beneficiary.
B. the negotiating bank.
C. the reimbursing bank.
D. none.
ANSWER: A
98. A letter of credit that provides for granting of pre-shipment finance as well as storage of goods in the
name of the bank is
A. a red clause letter of credit
B. a standby letter of credit.
C. a green clause letter of credit.
D. a secured letter of credit.
ANSWER: C
99. When a letter of credit does not indicate whether it is revocable or irrevocable, it is treated as
A. revocable
B. irrevocable
C. revocable or irrevocable at the option of the beneficiary.
D. revocable or irrevocable at the option of the negotiating bank.
ANSWER: B
100. Payment for bills drawn under letter of credit should be made by the negotiating bank
A. after the documents are approved by the issuing bank.
B. immediately or on a future date depending upon the terms of credit.
C. only in foreign currency.
D. immediately in all cases.
ANSWER: B

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