International Settlement English Test

Multiple Choice

1. Which of the following is NOT a common method of international payment?
A. Wire transfer
B. Check
C. Bitcoin
D. Letter of credit
2. When an exporter receives a letter of credit from an importer, what does it guarantee?
A. That the payment will be made on time
B. That the goods will be delivered on time
C. That the quality of the goods will be satisfactory
D. That the importer will not go bankrupt
3. Which of the following is true about the SWIFT system?
A. It is the most commonly used system for international wire transfers
B. It is owned by the United Nations
C. It is only used by banks in Europe
D. It is used primarily for domestic transactions
4. What is the role of the correspondent bank in international payments?
A. To process the payment between the buyer's and seller's banks
B. To verify that the goods have been delivered
C. To ensure that the payment is made in the correct currency
D. To provide financing to the importer

True or False

1. The real-time gross settlement (RTGS) system is only used for domestic transactions.
2. In an open account system, the exporter ships the goods and waits for the importer to pay at a later date.
3. The Uniform Customs and Practice for Documentary Credits (UCP 600) is a set of international rules for letters of credit.
4. Bank drafts and money orders are commonly used for international payments.

Fill in the Blanks

1. ______________ is a type of irrevocable letter of credit that can be transferred to a third party.
2. A ______________ is a contract between an importer and a bank that guarantees payment to the exporter.
3. The ______________ is a system for standardized messaging between banks.
4. The ______________ bank is the bank that acts as an intermediary between the buyer's and seller's banks.

Answers

Multiple Choice

1. C
2. A
3. A
4. A

True or False

1. False
2. True
3. True
4. False

Fill in the Blanks

1. Transferable letter of credit
2. Letter of credit
3. SWIFT system
4. Correspondent

International settlement is a crucial aspect of global trade, and understanding the various methods of payment and the roles of the parties involved is essential for any business engaged in international commerce. The multiple choice section of this test covers common methods of international payment, such as wire transfers, checks, and letters of credit. It also tests knowledge of the SWIFT system and the role of correspondent banks in international payments. The true/false section of the test covers important topics such as the open account system and the Uniform Customs and Practice for Documentary Credits (UCP 600). Finally, the fill in the blanks section tests knowledge of specific terms related to international settlement, including transferable letters of credit, the SWIFT system, and correspondent banks. In conclusion, this test is a comprehensive assessment of a critical component of global trade. It is essential for businesses engaged in international commerce to have a thorough understanding of international settlement in order to ensure smooth transactions and avoid costly mistakes.