Mitigating Techniques for Commercial Risk/Assessment

1. A common technique to avoid payment risk is to

a. complete a thorough credit check on new customers.

b. request bank support for customers.

c. sell to customers where credit risk insurance is available.

d. insist that customers wire funds in advance of shipment.

2. The decision as to when to utilize techniques to mitigate payment risk is

a. determined by the contract signed by the importer.

b. determined by the exporter’s desire to reduce its risk.

c. determined by the exporter’s country law.

d. provided by the sales department who know their customers.

3. A common technique of transference of payment risk is

a. countertrade.

b. purchasing credit insurance.

c. forfaiting the receivable.

d. requiring a letter of credit.

4. Credit insurance can be purchased from

a. Ex-Im Bank.

b. the SBA.

c. local banks.

d. the Chamber of Commerce.

(Correct answers: 1=D, 2=B, 3=C, 4=A.)

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