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PGDIB [2019-2020]
SEMESTER II
CORE : EXPORT IMPORT FINANCE - 281B
Multiple Choice Questions.
1. Incoterms cover
A. trade in intangibles
B. ownership and transfer rights
C. contracts of carriage.
D. rights and obligations of parties to contract of sales
ANSWER: D
2. Which of the following term cannot be used for transportation of goods by sea?
A. CFR.
B. DDP.
C. DES
D. DEQ.
ANSWER: B
4. The group of incoterms under which the seller's responsibility is to obtain freight paid transport
document for the main carriage is
A. E terms
B. C terms.
C. D terms
D. F terms.
ANSWER: B
9. Adoption of incoterm is
A. compulsory for all international contracts
B. compulsory for all letter of credit transactions.
C. optional for the parties to the contract.
D. mandatory for transactions with Europe.
ANSWER: C
10. Which of the following term cannot be used for transportation of goods by Road or Air?
A. FAS.
B. DDP.
C. EXW.
D. CIP.
ANSWER: A
13. Which of the following person is not eligible for packing credit?
A. a .merchant exporter.
B. a person making deemed exports.
C. sub-suppliers to manufacture exporter.
D. supplier to sub-supplier to manufacture exporter.
ANSWER: D
14. The running account facility for packing credit is available for
A. status holders only.
B. export for specified goods.
C. exporters with good track record
D. exporters with orders above Rs. 100 crores.
ANSWER: C
15. The advantage to the exporter of running account facility of packing credit is
A. production of letter of credit or firm order is completely waive
B. the period of facility need not be adhered to.
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C. production of letter credit on firm order is waived immediately they must be produced within
reasonable time.
D. the rate of interest is low.
ANSWER: C
16. The exemption from the condition credit should not exceed domestic cost of production is not waived
for
A. commodity eligible for duty drawback.
B. commodity imported under advance licence
C. HPS groundnuts.
D. agro based productions like tobacco.
ANSWER: B
17. The substitution of commodity/fresh export of adjustment of packing credit is not available for
A. advance against sensitive commodities.
B. transactions of sister/associate/group concerns.
C. exports availing running account facility.
D. exports with imports.
ANSWER: B
18. Normally the maximum period for which packing credit advances are made is
A. 90 days.
B. 135 days.
C. 180 days.
D. 360 days.
ANSWER: C
20. A packing credit was granted against an export order but the export could not take place
A. It should be reported to the RBI
B. The exporter should be black list
C. Claim should be preferred with ECG
D. Interest at domestic rate should be charged on the advance from the date of advance
ANSWER: D
21. 2 For direct export the packing credit should normally be granted only against
A. a letter of credit.
B. firm order.
C. export licence.
D. a letter of credit or firm order.
ANSWER: D
22. For packing credit in rupees the interest of period up to 180 days is chargeable at
A. BPLR minus 2.5%.
B. BPLR minus 3%.
C. not exceeding BPLR minus 2.5%.
D. not less than BPLR minus 2.5%.
ANSWER: C
28. If an export bill which was purchased /negotiated is not realized within reasonable time from the due
date the bank should
A. reserve the bill from the export bill purchase portfolio.
B. make a claim with ECGC
C. report to RBI.
D. take further bills from the exporter only on collection basis.
ANSWER: A
33. Advance remittance from importer can be accepted by an exporter in India provided
A. the advance does not carry interest payment.
B. shipment will be made only after one year from the date of receipt of advance.
C. advance does not exceed 25% of export value.
D. rate of interest,if payable, does not exceed Libor plus 1%.
ANSWER: D
35. . If the importer refuses to accept the bill drawn on him the exporter
A. should reimport the goods.
B. must find an alternate buyer.
C. may reimport or sell to an alternate buyer depending upon commercial expediency
D. sue the importer.
ANSWER: C
39. 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 low.
ANSWER: C
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42. The facility that is available to commercial banks in India from Exim bank is
A. refinancing of export credit.
B. export bill re-discounting.
C. syndication of export credit risks.
D. all the above.
ANSWER: D
49. Under supplier's credit for deferred payment exports scheme of Exim bank
A. pre-shipment finance is available for periods beyond 180 days
B. post-shipment finance is available in Indian rupees for deferred payment exports.
C. post-shipment finance is available in foreign currency for deferred payment exports.
D. post-shipment finance is available in Indian rupees or foreign currency for deferred payment exports.
ANSWER: A
50. Which of the following statements relating to consultancy and technology services finance programme
of Exim bank is wrong?
A. The exporter is expected to get an advance payment of 25%
B. The export should be covered byECGC policy.
C. Minimum period of the loan is seven years.
D. They should be secured by a government guarantee or letter of credit.
ANSWER: C
53. Which of the following is not a common feature of direct lending by Exm 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
B. RBI
C. EXIM Bank
D. ECGC
ANSWER: A
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 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
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
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
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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
68. The percentage of contract value the exporter can avail as advance from importer
A. 15%
B. 25%
C. 30%
D. 35%
ANSWER: A
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. . Which of the following organization does not specialize in training activity?
A. Indian institute of Foreign Trade.
B. Indian Trade Promotion Organization.
C. Indian Institute of Packaging.
D. None of the above.
ANSWER: B
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
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
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 millions.
C. the imports per transaction exceeds USD 20 millions.
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
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
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
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
101. Under an acceptance letter of credit, the responsibility of the issuing bank is
A. only to accept the bill
B. to pay against the bill
C. to accept the immediately and also to pay the amount of the bill on its due date.
D. to get the acceptance of the importer on the bill.
ANSWER: C
103. Under the confirmed letter of credit the undertaking the confirming bank is
A. in addition to that of the opening bank.
B. in substitution of the undertaking of the opening bank.
C. subject to government policies to the exporter country.
D. none of the above.
ANSWER: A
104. A credit which provides for reinstatement of the amount as and when bills are drawn under it is called
A. reinstatement credit
B. reimbursement credit
C. revolving credit.
D. back-to-back credit.
ANSWER: C
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105. Working Group for approval of project exports does not include
A. Reserve Bank of India.
B. Financing bank.
C. Exim bank.
D. DGFT.
ANSWER: D
106. For project exports fulfilling norms for period of credit, in principle sanction can be given by
A. the financing bank.
B. Exim bank.
C. The financing bank for contracts worth up to Rs 25 crores and Exim bank for contracts worth up to
RS 100 crores.
D. the financing bank for contracts worth up to Rs 100 crores and Exin bank for contracts worth up to
Rs 25 crores.
ANSWER: C
107. The following statement with respect to moratorium on repayment of principal on project export is
not correct
A. For capital goods exports the maximum period of moratorium is 1 year.
B. For turnkey project exports the maximum period moratorium is 2 years.
C. For consumer goods export the maximum period moratorium is 3 years.
D. None of the above.
ANSWER: C
108. Export of services on deffered payment terms requires clearance of the Working Group for
A. contracts beyond Rs 5 crores.
B. contracts beyond 10 crores
C. contracts beyond 20 crores
D. all contracts.
ANSWER: D
109. In case of failure of the exporter, the liability of the bank which has issued the performance guarantee
is to
A. compel the exporter to fulfill his obligation.
B. find alternative contractor who can execute the contract
C. financially compensate the beneficiary up to the value of the contract
D. financially compensate the beneficiary up to the guaranteed amount.
ANSWER: D
111. Indian parties are prohibited from making investment in foreign entity engaged in the business of
A. real estate.
B. real estate or banking.
C. real estate or banking or agriculture.
D. none of the above.
ANSWER: B
112. Direct investment in a joint venture abroad can be made by an Indian party with ceiling on limit under
automatic route if the investment is made from
A. balances in EEFC account
B. funds raised through ADR/GDR.
C. balances in EEFC account or funds raised through ADR/GDR.
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D. no such provision.
ANSWER: C
113. Which of the following is not an approved method of funding direct investment in a foreigh joint
venture?
A. Capitalisation of reserves
B. Issusing shares in foreign market.
C. Swap of shares.
D. Utilisation of ECB proceeds.
ANSWER: B
114. An Indian entity which has made direct investment abroad is not required to
A. repatriate to India the dues receivable from foreign entity.
B. submit annual performance report to Reserve Bank.
C. ensure return on investment is not less than the prime rate in the country of investment.
D. none of the above.
ANSWER: C
115. Export Credit Guarantee Corporation(ECGC) policies do not cover risk against
A. buyer's protracted default to pay for the goods.
B. war in buyer's country.
C. buyer's failure to obtain necessary import licence or exchange authorization from authorities in his
country.
D. cancellation of export licence.
ANSWER: C
118. The maximum amount of claim against an individual buyer that ECGC will accept under its standard
policy issued to an exporter is known as
A. maximum liability.
B. credit limit.
C. individual limit.
D. there is no such ceiling.
ANSWER: B
C. advertisements abroad
D. conducting trade tours.
ANSWER: A
125. 19 A guarantee issued by a bank in lieu of bid money to be deposited by the exporter to participate in
the tender is a
A. bid bond guarantee
B. performance guarantee.
C. advance payment guarantee
D. retention money guarantee.
ANSWER: A
126. A guarantee issued in favour of an importer so that he releases entire contract amount instead of
retaining a portion is
A. performance guarantee
B. retention money guarantee.
C. bid bond guarantee.
D. advance payment guarantee.
ANSWER: B
127. For export guarantees issued a bank may obtain cover from ECGC under its
A. export performance guarantee.
B. retention money guarantee.
C. bid bond guarantee.
D. advance payment guarantee.
ANSWER: A
C. Customs Act.
D. Director General of Foreign Trade.
ANSWER: A
129. Two parties agreeing to buy and sell from each other without involving payment is known as
A. Domestic trade.
B. foreign trade.
C. Countertrade.
D. non paying trade.
ANSWER: C
136. Which one of the following statements relating to Consultancy and Technology Services Finance
Programme of Exim Bank is Wrong?
A. The exporter is expected to get an advance payment of 25%.
B. The export should be covered by ECGC policy.
C. Minimum period of loan is seven years.
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138. Which one of the following is not a common features 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 low.
ANSWER: C
139. The facility that is available to commercial banks in India from Exim Bank is
A. refinance of export credit.
B. export bills rediscounting.
C. syndication of export credit risks
D. all the above.
ANSWER: D
142. For availing discounting of bills with forfeiter, the exporter should produce
A. avalised bills of exchange or promissory notes accepted by importer's bank
B. avalised bills of exchange or promissory notes accepted by exporter's bank.
C. Reserve Bank permit.
D. no objection certificate from Exim bank.
ANSWER: A
143. Which of the following is not a basic objective of documentation in foreign trade?
A. to assure that the exporter will receive the payment.
B. to assure that the importer will receive the goods.
C. to reduce foreign exchange risk.
D. none of the above.
ANSWER: D
145. .______ risk is the potential exchange loss from outstanding obligations as a result of exchange-rate
fluctuations.
A. Trade.
B. Exchange.
C. Finance.
D. Transaction.
ANSWER: D
Staff Name
Aravinth.S.
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