CAIIB Paper 2 Module A Quiz 6

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Question 1 of 20

1. Question
Post-shipment finance: Post-shipment finance is provided:
- Only before an export order
- Without export evidence
- After shipment, against export receivables/documents subject to conditions
- Only to non-resident importers
Correct

It bridges the period after shipment until export proceeds are realised, subject to applicable rules.

Incorrect

It bridges the period after shipment until export proceeds are realised, subject to applicable rules.

Unattempted

It bridges the period after shipment until export proceeds are realised, subject to applicable rules.
Question 2 of 20

2. Question
Post-shipment finance — application: Which statement is most accurate in a CAIIB banking scenario concerning post-shipment finance?
- Without export evidence
- After shipment, against export receivables/documents subject to conditions
- Only before an export order
- Only to non-resident importers
Correct

It bridges the period after shipment until export proceeds are realised, subject to applicable rules. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.

Incorrect

It bridges the period after shipment until export proceeds are realised, subject to applicable rules. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.

Unattempted

It bridges the period after shipment until export proceeds are realised, subject to applicable rules. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.
Question 3 of 20

3. Question
ECB: External Commercial Borrowing broadly means:
- Any domestic rupee loan
- A grant with no repayment obligation
- A resident individual‘s savings deposit
- Commercial borrowing by an eligible Indian entity from a recognised non-resident lender under the framework
Correct

ECB is cross-border borrowing governed by RBI/FEMA eligibility, cost, maturity, end-use and reporting conditions.

Incorrect

ECB is cross-border borrowing governed by RBI/FEMA eligibility, cost, maturity, end-use and reporting conditions.

Unattempted

ECB is cross-border borrowing governed by RBI/FEMA eligibility, cost, maturity, end-use and reporting conditions.
Question 4 of 20

4. Question
ECB — application: Which statement is most accurate in a CAIIB banking scenario concerning ecb?
- A resident individual‘s savings deposit
- Commercial borrowing by an eligible Indian entity from a recognised non-resident lender under the framework
- A grant with no repayment obligation
- Any domestic rupee loan
Correct

ECB is cross-border borrowing governed by RBI/FEMA eligibility, cost, maturity, end-use and reporting conditions. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.

Incorrect

ECB is cross-border borrowing governed by RBI/FEMA eligibility, cost, maturity, end-use and reporting conditions. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.

Unattempted

ECB is cross-border borrowing governed by RBI/FEMA eligibility, cost, maturity, end-use and reporting conditions. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.
Question 5 of 20

5. Question
ECB end use: ECB proceeds require end-use checks because:
- The regulatory framework allows certain uses and restricts others
- End-use is decided only by lender marketing
- Reporting is never required
- ECB can always be used for any purpose
Correct

ECB proceeds are subject to end-use restrictions and reporting under the operative framework.

Incorrect

ECB proceeds are subject to end-use restrictions and reporting under the operative framework.

Unattempted

ECB proceeds are subject to end-use restrictions and reporting under the operative framework.
Question 6 of 20

6. Question
ECB end use — application: Which statement is most accurate in a CAIIB banking scenario concerning ecb end use?
- ECB can always be used for any purpose
- End-use is decided only by lender marketing
- The regulatory framework allows certain uses and restricts others
- Reporting is never required
Correct

ECB proceeds are subject to end-use restrictions and reporting under the operative framework. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.

Incorrect

ECB proceeds are subject to end-use restrictions and reporting under the operative framework. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.

Unattempted

ECB proceeds are subject to end-use restrictions and reporting under the operative framework. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.
Question 7 of 20

7. Question
Trade credit: International trade credit commonly includes:
- A central-bank export grant
- A currency option
- Supplier‘s credit or buyer‘s credit for imports
- Only a domestic savings account
Correct

Trade credit finances imports through supplier or buyer credit arrangements, subject to RBI/FEMA rules.

Incorrect

Trade credit finances imports through supplier or buyer credit arrangements, subject to RBI/FEMA rules.

Unattempted

Trade credit finances imports through supplier or buyer credit arrangements, subject to RBI/FEMA rules.
Question 8 of 20

8. Question
Trade credit — application: Which statement is most accurate in a CAIIB banking scenario concerning trade credit?
- Supplier‘s credit or buyer‘s credit for imports
- Only a domestic savings account
- A currency option
- A central-bank export grant
Correct

Trade credit finances imports through supplier or buyer credit arrangements, subject to RBI/FEMA rules. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.

Incorrect

Trade credit finances imports through supplier or buyer credit arrangements, subject to RBI/FEMA rules. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.

Unattempted

Trade credit finances imports through supplier or buyer credit arrangements, subject to RBI/FEMA rules. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.
Question 9 of 20

9. Question
Buyer credit: Buyer‘s credit generally means:
- The exporter borrows from a domestic branch for payroll
- A customs-issued LC
- A foreign lender finances the importer, often to pay the overseas supplier
- An exporter‘s pre-shipment loan
Correct

Buyer‘s credit is an import financing arrangement in which a lender finances the buyer/importer.

Incorrect

Buyer‘s credit is an import financing arrangement in which a lender finances the buyer/importer.

Unattempted

Buyer‘s credit is an import financing arrangement in which a lender finances the buyer/importer.
Question 10 of 20

10. Question
Buyer credit — application: Which statement is most accurate in a CAIIB banking scenario concerning buyer credit?
- The exporter borrows from a domestic branch for payroll
- An exporter‘s pre-shipment loan
- A customs-issued LC
- A foreign lender finances the importer, often to pay the overseas supplier
Correct

Buyer‘s credit is an import financing arrangement in which a lender finances the buyer/importer. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.

Incorrect

Buyer‘s credit is an import financing arrangement in which a lender finances the buyer/importer. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.

Unattempted

Buyer‘s credit is an import financing arrangement in which a lender finances the buyer/importer. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.
Question 11 of 20

11. Question
Seller credit: Seller‘s credit generally involves:
- The importer paying before an order in every case
- A central-bank payroll loan
- The overseas supplier allowing the importer to pay later
- A currency option premium
Correct

Seller‘s credit is supplier-provided deferred payment terms and creates buyer payment risk for the seller.

Incorrect

Seller‘s credit is supplier-provided deferred payment terms and creates buyer payment risk for the seller.

Unattempted

Seller‘s credit is supplier-provided deferred payment terms and creates buyer payment risk for the seller.
Question 12 of 20

12. Question
Seller credit — application: Which statement is most accurate in a CAIIB banking scenario concerning seller credit?
- The importer paying before an order in every case
- A currency option premium
- The overseas supplier allowing the importer to pay later
- A central-bank payroll loan
Correct

Seller‘s credit is supplier-provided deferred payment terms and creates buyer payment risk for the seller. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.

Incorrect

Seller‘s credit is supplier-provided deferred payment terms and creates buyer payment risk for the seller. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.

Unattempted

Seller‘s credit is supplier-provided deferred payment terms and creates buyer payment risk for the seller. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.
Question 13 of 20

13. Question
Incoterms: Incoterms primarily allocate:
- Bank capital requirements
- Income-tax residency
- FX fixing times
- Delivery obligations, costs and risks between seller and buyer
Correct

Incoterms clarify delivery, cost and risk responsibilities but do not settle every issue such as title or payment.

Incorrect

Incoterms clarify delivery, cost and risk responsibilities but do not settle every issue such as title or payment.

Unattempted

Incoterms clarify delivery, cost and risk responsibilities but do not settle every issue such as title or payment.
Question 14 of 20

14. Question
Incoterms — application: Which statement is most accurate in a CAIIB banking scenario concerning incoterms?
- Bank capital requirements
- Income-tax residency
- FX fixing times
- Delivery obligations, costs and risks between seller and buyer
Correct

Incoterms clarify delivery, cost and risk responsibilities but do not settle every issue such as title or payment. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.

Incorrect

Incoterms clarify delivery, cost and risk responsibilities but do not settle every issue such as title or payment. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.

Unattempted

Incoterms clarify delivery, cost and risk responsibilities but do not settle every issue such as title or payment. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.
Question 15 of 20

15. Question
FOB: Under FOB, risk generally transfers when goods are:
- At the seller‘s factory gate
- Cleared for import at destination
- On board the vessel at the named port of shipment
- At the buyer‘s warehouse
Correct

FOB is for sea/inland-waterway transport; risk transfers when goods are on board at shipment.

Incorrect

FOB is for sea/inland-waterway transport; risk transfers when goods are on board at shipment.

Unattempted

FOB is for sea/inland-waterway transport; risk transfers when goods are on board at shipment.
Question 16 of 20

16. Question
FOB — application: Which statement is most accurate in a CAIIB banking scenario concerning fob?
- At the seller‘s factory gate
- At the buyer‘s warehouse
- On board the vessel at the named port of shipment
- Cleared for import at destination
Correct

FOB is for sea/inland-waterway transport; risk transfers when goods are on board at shipment. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.

Incorrect

FOB is for sea/inland-waterway transport; risk transfers when goods are on board at shipment. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.

Unattempted

FOB is for sea/inland-waterway transport; risk transfers when goods are on board at shipment. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.
Question 17 of 20

17. Question
CIF: Under CIF, the seller generally arranges and pays for:
- All import duties and warehouse unloading in every case
- Only local transport in seller‘s country
- Cost, insurance and freight to the named destination port
- No insurance under any circumstances
Correct

CIF includes seller-arranged carriage and insurance, while risk transfers when goods are on board at shipment.

Incorrect

CIF includes seller-arranged carriage and insurance, while risk transfers when goods are on board at shipment.

Unattempted

CIF includes seller-arranged carriage and insurance, while risk transfers when goods are on board at shipment.
Question 18 of 20

18. Question
CIF — application: Which statement is most accurate in a CAIIB banking scenario concerning cif?
- No insurance under any circumstances
- All import duties and warehouse unloading in every case
- Only local transport in seller‘s country
- Cost, insurance and freight to the named destination port
Correct

CIF includes seller-arranged carriage and insurance, while risk transfers when goods are on board at shipment. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.

Incorrect

CIF includes seller-arranged carriage and insurance, while risk transfers when goods are on board at shipment. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.

Unattempted

CIF includes seller-arranged carriage and insurance, while risk transfers when goods are on board at shipment. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.
Question 19 of 20

19. Question
Open account: Under open-account trade, the exporter generally ships:
- Only after LC payment
- Only when payment is guaranteed by a bank
- Without an invoice
- Before receiving payment, exposing the exporter to buyer credit risk
Correct

Open-account terms usually leave the exporter exposed to buyer and country risk unless separately mitigated.

Incorrect

Open-account terms usually leave the exporter exposed to buyer and country risk unless separately mitigated.

Unattempted

Open-account terms usually leave the exporter exposed to buyer and country risk unless separately mitigated.
Question 20 of 20

20. Question
Open account — application: Which statement is most accurate in a CAIIB banking scenario concerning open account?
- Only when payment is guaranteed by a bank
- Only after LC payment
- Without an invoice
- Before receiving payment, exposing the exporter to buyer credit risk
Correct

Open-account terms usually leave the exporter exposed to buyer and country risk unless separately mitigated. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.

Incorrect

Open-account terms usually leave the exporter exposed to buyer and country risk unless separately mitigated. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.

Unattempted

Open-account terms usually leave the exporter exposed to buyer and country risk unless separately mitigated. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.