CAIIB · BFM · Chapter 7

Role of EXIM Bank, Reserve Bank of India, Exchange Control in India - FEMA, FEDAI

Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Bank Financial Management — CAIIB.

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Q

Define risk in international trade context.

A

Unplanned event with financial consequences causing loss or reduced earnings due to uncertainty.

Q

What is buyer risk in foreign trade?

A

Exporter faces non-acceptance, non-payment, quality disputes, buyer insolvency or default.

Q

What is seller risk in foreign trade?

A

Importer faces non-shipment, poor quality goods, delay after advance payment.

Q

What does shipping risk cover?

A

Intermediary risks: mishandling, damage, theft, delay by shippers, handlers, transporters.

Q

Define legal risk in foreign trade.

A

Law changes in seller/buyer country prevent export or remittance of invoice proceeds.

Q

What is country risk and political risk?

A

Developments in buyer/seller country causing default: war, civil unrest, hostile relations.

Q

What causes operational risk in trade?

A

Strikes at factory, suppliers, transporters, banks, clearing agents disrupt operations.

Q

What is exchange risk in foreign trade?

A

Currency movement affecting exporters/importers directly via open position or cost pass-through.

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