Documents used in foreign trade - SS1 Commerce Past Questions and Answers - page 1
Which of the following is a legal document in which a borrower pledges collateral as security for a loan?
Foreign Bill of Exchange
Documentary Credit
Letter of Hypothecation
Which financial instrument is a form of prepaid currency that can be used like cash when traveling?
Mail Transfer
Telegraphic Transfer
Travelers Cheque
Which method of sending money from one bank account to another involves the use of postal mail?
Mail Transfer
Telegraphic Transfer
Foreign Bill of Exchange
Which financial instrument allows for the transfer of funds between parties in different countries?
Letter of Hypothecation
Foreign Bill of Exchange
Travelers Cheque
Which method of electronically transferring funds from one bank account to another is typically faster and more secure than a mail transfer?
Mail Transfer
Telegraphic Transfer
Foreign Bill of Exchange
What is a documentary credit, and how does it work?
A documentary credit, also known as a letter of credit, is a guarantee issued by a bank on behalf of a buyer that ensures payment will be made to the seller upon certain conditions being met. Essentially, the buyer's bank promises to pay the seller once they receive documentation that proves the goods or services have been delivered as agreed.
How is a travelers cheque different from carrying cash while traveling?
Travelers cheques are considered safer than carrying cash because they can be replaced if lost or stolen. They are a form of prepaid currency that can be exchanged for local currency at banks and other authorized locations, making them a convenient option for travelers.