Question

Which of the following is NOT a basic objective of the 3-key documents used in international trade?

		To assure that the importer will not default on the payment
		To assure that the importer will receive the goods per specifications
		To assure that the exporter will receive the payment on time
		To assure that the importer will receive the goods on time
		To assure that the foreign exchange risk is reduced

The Rocky Mountain Group, a private equity firm headquartered in West Virginia (US), borrows EUR 40,000,000 for a year at 8% interest when the spot rate is USD1.10/EUR. What is the dollar cost of this debt if the spot rate is USD1.06/EUR in one year?

		6.95%
		9.82%
		4.07%
		8.80%
		7.70%

Terms of a/an ________ cannot be changed without prior consent from all parties

		Sight draft
		Ordered bill of lading
		Straight bill of lading
		Revocable letter of credit
		Irrevocable letter of credit

Answer 1

Which of the following is NOT a basic objective of the 3-key documents used in international trade..
Ans = (E). To assure that the foreign exchange risk is reduced
(Reason : All other option are specifically given assurance to key documents which used by international trade.)

The Rocky Mountain Group, a private equity firm headquartered in West Virginia (US), borrows EUR 40,000,000 for a year at 8% interest when the spot rate is USD1.10/EUR. What is the dollar cost of this debt if the spot rate is USD1.06/EUR in one year..
Ans = (E) 7.70%
(Calculation : USD1.06/USD1.10 *8% = 7.70%)

Terms of a/an ________ cannot be changed without prior consent from all parties
Ans =(E) Irrevocable letter of credit.
(Reason : An irrevocable letter of credit is a financial instrument used by banks to guarantee a buyer's obligations to a seller. As It is irrevocable because the letter of credit cannot be modified unless all parties agree to the modifications.)