Formative Assessment DPP50123 Test Chapter 4 DPI5B

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Trade Financing

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azma aziz

Malaysia

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Formative Assessment DPP50123 Test Chapter 4 DPI5A

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Formative Assessment DPP50123 Test Chapter 4 DPI5B


Formative Assessment DPP50123 Test Chapter 4 DPI5BOnline version Trade Financing by azma aziz 1 What is the main purpose of trade financing? a To calculate customs duty b To control foreign exchange rates c To reduce taxation d To provide funds and manage payment risk in trade 2 Which of the following defines factoring? a Guaranteeing payment by a bank b Leasing equipment for short-term use c Selling invoices to a third party at a discount for immediate cash d Borrowing money to purchase machinery 3 Forfaiting is mainly used for: a Local short-term financing b Import duties c Retail credit sales d Long-term export receivables 4 Leasing means: a Receiving export credit from the government b Using assets by paying rent without owning them c Buying goods on credit d Selling invoices to a factor 5 Which statement about hire purchase is TRUE? a The lessee never owns the asset b No contract is required c Ownership transfers after the last payment d Payment is made once at the beginning 6 In countertrade, payment is made: a By exchanging goods or services b Using bank guarantee c Through credit card d In cash only 7 The key function of a bank guarantee is to: a Replace insurance policy b Guarantee payment performance if the buyer fails c Guarantee product quality d Provide low-interest loan 8 Which statement best describes a letter of credit (L/C)? a The bank guarantees payment to exporter after verifying documents b It replaces a bank guarantee c It protects importers only d It removes all payment risks 9 Which is NOT a benefit of factoring? a Reduced administrative burden b Ownership of asset c Transfer of credit risk d Immediate cash flow 10 Which method provides payment assurance to the exporter through a bank’s commitment? a Hire Purchase b Countertrade c Factoring d Letter of Credit 11 What is the main purpose of trade financing? a B. To provide funds and manage payment risk in trade b A. To reduce taxation c C. To control foreign exchange rates 12 Which of the following best defines factoring? a C. Leasing equipment for short-term use b A. Borrowing money to purchase machinery c B. Selling invoices to a third party at a discount for immediate cash 13 Forfaiting is mainly used for: a C. Import duties b B. Long-term export receivables c A. Retail credit sales 14 Leasing means: a C. Selling invoices to a factor b A. Buying goods on credit c B. Using assets by paying rent without owning them 15 Which statement about hire purchase is TRUE? a A. The lessee never owns the asset b B. Ownership transfers after the last payment c C. Payment is made once at the beginning 16 What is the main purpose of trade financing? a To provide funds and manage payment risk in trade b To calculate customs duty c To control foreign exchange rates d To reduce taxation 17 Which best defines factoring? a Selling invoices to a third party at a discount for immediate cash b Leasing equipment for short-term use c Borrowing money to purchase machinery d Guaranteeing payment by a bank 18 Forfaiting is mainly used for: a Import duties b Long-term export receivables c Local short-term financing d Retail credit sales 19 Leasing means: a Receiving export credit from the government b Using assets by paying rent without owning them c Selling invoices to a factor d Buying goods on credit 20 Which statement about hire purchase is TRUE? a No contract is required b The lessee never owns the asset c Ownership transfers after the last payment d Payment is made once at the beginning 21 In countertrade, payment is made: a Through credit card b By exchanging goods or services c In cash only d Using bank guarantee 22 The key function of a bank guarantee is to: a Provide low-interest loan b Guarantee payment performance if the buyer fails c Replace insurance policy d Guarantee quality of product 23 Which statement best describes letter of credit (L/C)? a It replaces a bank guarantee b It is an agreement where the bank guarantees payment to exporter after verifying documents c It removes all payment risks d It protects importers only 24 Which is NOT a benefit of factoring? a Transfer of credit risk b Ownership of asset c Immediate cash flow d Reduced administrative burden 25 Which is a non-traditional method of financing? a Leasing b Countertrade c Hire Purchase d Factoring 26 Which financial institution primarily provides export credit insurance to Malaysian exporters? a Bank Pembangunan Malaysia b EXIM Bank Malaysia c Bank Negara Malaysia d SME Bank 27 Commercial banks in trade financing usually provide: a Industrial research grants b Short-term trade credit and working capital loans c Long-term project financing d Insurance policies 28 Bank Pembangunan Malaysia mainly focuses on: a International trade insurance b Retail banking c Infrastructure and industrial development d Agricultural financing 29 Which institution regulates monetary and financial policy in Malaysia? a Bank Rakyat b Commercial Bank c Bank Negara Malaysia d EXIM Bank Malaysia 30 Credit Guarantee Corporation (CGC) helps small businesses by: a Providing direct loans b Giving government contracts c Guaranteeing loans to reduce risk to banks d Managing export insurance 31 What is the main difference between factoring and forfaiting? a Factoring is long-term; forfaiting is short-term b Both are used for domestic trade only c Both involve government agencies d Factoring is short-term; forfaiting is long-term 32 Leasing differs from hire purchase because: a Payments are one-time in leasing b Leasing involves no interest c Ownership transfers immediately in leasing d Ownership never transfers in leasing 33 In countertrade, which risk is most likely to occur? a Interest rate risk b Quality and valuation risk of goods exchanged c Inflation risk d Exchange rate risk 34 A company that wants to improve liquidity without increasing debt should use: a Leasing b Factoring c Hire Purchase d Bank Loan 35 Which method provides payment assurance to the exporter through a bank’s commitment? a Letter of Credit b Factoring c Hire Purchase d Countertrade 36 A Malaysian exporter sells USD 1 million receivables to a finance company for immediate cash — this is: a Hire Purchase b Factoring c Forfaiting d Leasing 37 A company rents construction machinery for 6 months without ownership — this is: a Countertrade b Hire Purchase c Leasing d Factoring 38 An importer requests the bank to ensure payment to exporter only after verifying shipping documents — this is: a Bank Guarantee b Forfaiting c Countertrade d Letter of Credit 39 Malaysia exports palm oil to Russia and receives machinery in return — this transaction is: a Factoring b Forfaiting c Hire Purchase d Countertrade 40 A local exporter sells unpaid invoices to a financial intermediary to reduce collection work — this method is: a Factoring b Bank Guarantee c Forfaiting d Leasing 41 Factoring provides long-term credit facilities for exporters. a Neither b False c Both d True 42 Leasing involves ownership transfer before full payment is made. a True b False c Both d Neither 43 Countertrade is useful for countries facing shortage of foreign currency. a False b Neither c Both d True 44 Forfaiting helps exporters avoid political and commercial risks. a Neither b True c Both d False 45 A letter of credit guarantees payment by the exporter to the buyer. a Neither b False c Both d True Feedback 16 Trade finance helps fund transactions and manage payment risks, not tax, FX control, or duties. 17 Factoring involves selling receivables; it is not debt for assets or a lease. 18 Forfaiting focuses on medium/long export receivables, not retail or local financing. 19 Leasing grants use without ownership; ownership transfer is not required. 20 Ownership transfers at the end of payments in hire purchase agreements. 21 Countertrade uses value-in-kind exchanges, not cash or cards. 22 Bank guarantees back payment performance; not product quality or loans. 23 L/Cs assure exporters on document verification; they don’t eliminate all risks. 24 Factoring provides cash flow and credit risk transfer; it does not confer asset ownership. 25 Countertrade is a non-traditional method bridging currency gaps; others are traditional. 26 EXIM Bank Malaysia specializes in export credit insurance. 27 They focus on short-term credit and working capital, not long-term projects or grants. 28 Its emphasis is on infrastructure and industry, not retail or export insurance. 29 Bank Negara Malaysia is the central bank regulating policy. 30 CGC guarantees loans; it does not directly lend or give contracts. 31 Factoring typically handles short-term receivables; forfaiting covers longer-term exports. 32 In leasing, ownership usually never transfers unless specified. 33 Countertrade risks include mismatched quality or valuation, not typical FX or inflation risks primarily. 34 Factoring converts receivables to cash, improving liquidity without new debt. 35 A letter of credit provides bank-backed payment assurance to exporters. 36 Forfaiting occurs when exporters sell long-term receivables for cash upfront. 37 Leasing involves renting use without transfer of ownership. 38 LC verifies documents before payment; guarantees alone differ in scope. 39 Countertrade involves reciprocal goods/services in trade deals. 40 Factoring transfers receivables to a factor to improve collection and cash flow. 41 Factoring is short-term, not long-term credit facility. 42 In leasing, ownership typically does not transfer during the term. 43 Countertrade helps conserve foreign currency and balance trade. 44 Forfaiting reduces risk by transferring export receivables to the forfaiter. 45 LC guarantees payment to the exporter by the buyer's bank, not the reverse.

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Formative Assessment DPP50123 Test Chapter 4 DPI5BOnline version

by azma aziz

What is the main purpose of trade financing?

Which of the following defines factoring?

Forfaiting is mainly used for:

Leasing means:

Which statement about hire purchase is TRUE?

In countertrade, payment is made:

The key function of a bank guarantee is to:

Which statement best describes a letter of credit (L/C)?

Which is NOT a benefit of factoring?

Which method provides payment assurance to the exporter through a bank’s commitment?

What is the main purpose of trade financing?

Which of the following best defines factoring?

Forfaiting is mainly used for:

Leasing means:

Which statement about hire purchase is TRUE?

What is the main purpose of trade financing?

Which best defines factoring?

Forfaiting is mainly used for:

Leasing means:

Which statement about hire purchase is TRUE?

In countertrade, payment is made:

The key function of a bank guarantee is to:

Which statement best describes letter of credit (L/C)?

Which is NOT a benefit of factoring?

Which is a non-traditional method of financing?

Which financial institution primarily provides export credit insurance to Malaysian exporters?

Commercial banks in trade financing usually provide:

Bank Pembangunan Malaysia mainly focuses on:

Which institution regulates monetary and financial policy in Malaysia?

Credit Guarantee Corporation (CGC) helps small businesses by:

What is the main difference between factoring and forfaiting?

Leasing differs from hire purchase because:

In countertrade, which risk is most likely to occur?

A company that wants to improve liquidity without increasing debt should use:

Which method provides payment assurance to the exporter through a bank’s commitment?

A Malaysian exporter sells USD 1 million receivables to a finance company for immediate cash — this is:

A company rents construction machinery for 6 months without ownership — this is:

An importer requests the bank to ensure payment to exporter only after verifying shipping documents — this is:

Malaysia exports palm oil to Russia and receives machinery in return — this transaction is:

A local exporter sells unpaid invoices to a financial intermediary to reduce collection work — this method is:

Factoring provides long-term credit facilities for exporters.

Leasing involves ownership transfer before full payment is made.

Countertrade is useful for countries facing shortage of foreign currency.

Forfaiting helps exporters avoid political and commercial risks.

A letter of credit guarantees payment by the exporter to the buyer.