Bank and Financial Institutions Act
1. Nepal Rastra Bank may provide prior permission for commencement of BFIs within ........from receipt
of application with or without condition.
a. 90 days
b. 120 days
c. 150 days
d. 180 days
A: b
2. Minimum capital that needs to be issued to general public is....
a. 10%
b. 20%
c. 30%
d. 40%
A: c
3. Maximum ordinary share of total capital that needs to be issued to staff is....
a. 0.50%
b. 2.50%
c. 5.00%
d. 10.00%
A: a
4. Lockup period for converting promoter share in public share is...
a. 5 Years
b. 7 Years
c. 10Years
d. 12 Years
A: c
5. What is the minimum and maximum number of Board of Directors?
a. 3-7
b. 5-7
c. 7-7
d. None of Above A: b
6. What is the maximum initial tenure of Board of Directors excluding extension?
a. 3 Years
b. 4 Years
c. 5 Years
d. 6 Years
A: b
7. What is the maximum initial tenure of CEO excluding extension?
a. 3 Years
b. 4 Years
c. 5 Years
d. 6 Years
A: b
8. BFIs shall maintain General Reserve Fund. An amount equal to at least....of the net profit shall be
transferred to general reserve until such reserve becomes double of the issued paid-up capital.
a. 10%
b. 15%
c. 20%
d. 25%
A: c
9. A licensed institution authorized to carry on foreign exchange shall, at the end of each fiscal year
adjust the revaluation gain/loss in the Statement of Profit & Loss of the same year . While adjusting the
gain/loss, if in any year there is revaluation gain, at least ... of such gain shall be transferred to Exchange
Equalization Fund.
a. 5%
b. 15%
c. 25%
d. 35%
A: c
10. The Audited Financials of BFIs shall be signed by...
a. 2 Directors
b. CEO c. Statutory Auditor
d. All of Above
A: d
11. BFIs shall submit their financials to Nepal Rastra Bank within .........of completion of Fiscal Year.
a. 2 months
b. 3 months
c. 4 months
d. 6 Months
A:b
General Banking
1. Which is the first commercial bank of the world which is still in operation?
a. Banca Monte dei Paschi di Siena
b. Banque de France
c. Bank of England
d. Bank of Scotland
A: a
3. Which is the oldest central bank of the world?
a. Sveriges Riksbank
b. Banko de Espana
c. Bank de France
d. Bank of England
A: a
4. Which was the first country to introduce paper currency in the world?
a. United States of America
b. China
c. Egypt
d. Italy
A: b
5. Which was the first country to introduce polymer bank note in the world? a. United States of America
b. China
c. Australia
d. Sweden
A: c
6. Where is the headquarter of World Bank?
a. London, United Kingdom
b. Washington DC, United States of America
c. Tokyo, Japan
d. Oslo, Norway
A: b
8. Where the headquarter of IMF?
a. London, England
b. Washington DC, United States of America
c. Manila, Philippines
d. Oslo, Norway
A: b
10. Where is the headquarter of Asian Development Bank?
a. Bangkok, Thailand
b. Mandaluyong, Metro Manila, Philippines
c. Beijing, China
d. Tokyo, Japan
A: b
12. Where is the headquarter of Asian Clearing Union? aTeharan, Iran
b. Tokyo, Japan
c. Bangkok, Thailand
d. Manila, Philippines
A: a
13. Who is the present Finance Minister of Government of Nepal?
14. Who is the present Finance Secretary of Government of Nepal?
16. Who is the present President of Nepal Banker Association?
20. Who is the regulator of Security Exchange Board?
a. Security Exchange Board of Nepal
b. Security Exchange Regulator of Nepal
c. Security Exchange Monitoring Authority of Nepal d. None of Above
A: a
21. Who is the insurance regulatory authority of Nepal?
a. Insurance Regulatory Board
b. Insurance Board(Beema Samiti)
c. Insurance Authority Board
d. None of Above
A: b
22. Which is the first bank of Nepal?
a. Nepal Rastra Bank
b. Nepal Bank Ltd.
c. Rastriya Banijya Bank
d. Agricultural Development Bank.
A: b
23. When was Nepal Bank Limited established?
a. 15 November 1937 AD
b. 20 December 1940 AD
c. 25 January 2045 AD
d. 28 February 2055 AD
A: a
24. Which is the first private commercial bank of Nepal?
a. Nepal Grindlays Bank Ltd.
b. Nepal Indosuez Bank Ltd.
c. Nepal Arab Bank Ltd.
d. Nepal SBI Bank Ltd.
A: c
25. Which of the following bank is fully owned by Government of Nepal?
a. Nepal Bank Ltd.
b. Rastriya Banijya Bank Ltd.
c. Agricultural Development Bank Ltd.
d. None
A: b
Nepal Rastra Bank Act
1. How many members are there in Board of Directors of Nepal Rastra Bank?
a. 4
b. 5
c. 6
d. 7
A: d
2. Who appoints Board of Directors of Nepal Rastra Bank?
a. President
b. Prime Minister
c. Finance Minister
d. Council of Ministers
A: d
3. What is the term of office of Board Director?
a. 3 Years
b. 4 Years
c. 5 Years
d. 6 Years
A: c
4. Who is the Chairman of Nepal Rastra Bank Board?
a. Government Appointed Director
b. Finance Secretary
c. Governor
d. Dy. Governor
A: c
5. Who appoints Governor of Nepal Rastra Bank?
a. President
b. Council of Ministers
c. Prime Minister
d. Finance Minister
A: b
6. Governor of NRB takes oath of office and secrecy from....
a. President
b. Chief Justice
c. Prime Minister
d. Finance Minister
A: b
7. What is the term of office of Governor?
a. 3 Years
b. 4 Years
c. 5 Years
d. 6 Years
A: c
8. Who appoints Dy. Governors?
a. President
b. Council of Ministers
c. Prime Minister
d. Governor
A: b
9. Dy. Governor takes oath of office and secrecy from...
a. President
b. Chief Justice
c. Finance Minister
d. Governor
A: d
10. What is the term of office of Dy. Governor?
a. 3 Years
b. 4 Years
c. 5 Years d.
6 Years
A: c
Banking Exam MCQs for Nepal
1. Banking Fundamentals
Q1. What is the
primary function of a commercial bank?
a) Issuing currency
b) Accepting deposits and providing loans
c) Regulating foreign exchange
d) Formulating monetary policy
Answer: b) Accepting deposits and providing loans
Q2. Which of the
following is NOT a type of bank account?
a) Savings Account
b) Current Account
c) Fixed Deposit Account
d) Loan Account
Answer: d) Loan Account
Q3. What does KYC
stand for in banking?
a) Know Your Customer
b) Keep Your Cash
c) Know Your Currency
d) Keep Your Credit
Answer: a) Know Your Customer
2. Nepal Rastra Bank (NRB) and Monetary Policy
Q4. What is the
central bank of Nepal?
a) Nepal Bank Limited
b) RastriyaBanijya Bank
c) Nepal Rastra Bank
d) Agricultural Development Bank
Answer: c) Nepal Rastra Bank
Q5. Which of the
following is a tool of monetary policy used by Nepal Rastra Bank?
a) Fiscal policy
b) Open market operations
c) Taxation
d) Public expenditure
Answer: b) Open market operations
Q6. What is the
current repo rate set by Nepal Rastra Bank?
Answer:
Verify the latest rate from NRB updates.
3. Financial Awareness
Q7. What is the
full form of ATM?
a) Automated Teller Machine
b) Automated Transaction Machine
c) Any Time Money
d) Automated Transfer Machine
Answer: a) Automated Teller Machine
Q8. What is the
maximum deposit amount insured by the Deposit Insurance and Credit Guarantee
Corporation (DICGC) in Nepal?
a) NPR 200,000
b) NPR 500,000
c) NPR 1,000,000
d) NPR 2,000,000
Answer: b) NPR 500,000
Q9. Which of the
following is an example of a digital payment system in Nepal?
a) eSewa
b) PayPal
c) Google Pay
d) PhonePe
Answer: a) eSewa
4. Economics and Current Affairs
Q10. What is the
currency of Nepal?
a) Rupee
b) Taka
c) Dollar
d) Yen
Answer: a) Rupee
Q11. Which of the
following is the largest trading partner of Nepal?
a) India
b) China
c) USA
d) Bangladesh
Answer: a) India
Q12. What is the
current GDP growth rate of Nepal ?
Verify the latest data from NRB or World Bank.)
5. Banking Technology
Q13. What is the
full form of NEFT?
a) National Electronic Funds Transfer
b) National Electronic Financial Transaction
c) Nepal Electronic Funds Transfer
d) National Economic Funds Transfer
Answer: a) National Electronic Funds Transfer
Q14. Which of the
following is a feature of mobile banking?
a) Cash withdrawal
b) Fund transfer
c) qr withdrawal
Q15. What is the
purpose of a SWIFT code in banking?
a) To identify a specific bank during international transactions
b) To track domestic transactions
c) To manage ATM networks
d) To regulate interest rates
Answer: a) To identify a specific bank during international transactions
6. General Knowledge
Q16. Who is the current Governor of Nepal Rastra Bank ?
Q18. When was
Nepal Rastra Bank established?
a) 1956
b) 1965
c) 1971
d) 1980
Answer: a) 1956
Treasury Management
1.
What is the primary function of a bank's
treasury department?
a) Managing customer deposits
b) Managing the bank's liquidity, investments, and risk
c) Issuing loans to customers
d) Handling customer complaints
Answer: b)
Managing the bank's liquidity, investments, and risk
2.
Which of the following is a key
responsibility of treasury management?
a) Marketing bank products
b) Managing foreign exchange risk
c) Approving loan applications
d) Conducting audits
Answer: b)
Managing foreign exchange risk
3.
What is the purpose of a bank's treasury
in managing interest rate risk?
a) To maximize profits from loans
b) To ensure the bank's assets and liabilities are balanced
c) To reduce the cost of borrowing
d) To increase customer deposits
Answer: b)
To ensure the bank's assets and liabilities are balanced
4.
Which of the following instruments is
commonly used by treasury departments for short-term funding?
a) Bonds
b) Commercial Paper
c) Equity Shares
d) Mutual Funds
Answer: b)
Commercial Paper
5.
What is the role of a treasury in managing
a bank's cash flow?
a) To ensure sufficient liquidity for daily operations
b) To approve loan disbursements
c) To manage customer relationships
d) To conduct market research
Answer: a)
To ensure sufficient liquidity for daily operations
Trade Finance
6.
What is a Letter of Credit (LC) in trade
finance?
a) A guarantee from the buyer's bank to the seller
b) A loan provided to the exporter
c) A document used for customs clearance
d) A type of insurance for goods in transit
Answer: a)
A guarantee from the buyer's bank to the seller
7.
Which of the following is a key document
in international trade?
a) Bill of Exchange
b) Promissory Note
c) Bill of Lading
d) All of the above
Answer: d)
All of the above
8.
What is the purpose of a Bill of Lading?
a) To act as a receipt for goods shipped
b) To provide insurance for goods
c) To serve as a contract between buyer and seller
d) To act as a payment instrument
Answer: a)
To act as a receipt for goods shipped
9.
Which of the following is a risk covered
under trade finance?
a) Credit risk
b) Currency risk
c) Political risk
d) All of the above
Answer: d)
All of the above
10.
What is the full form of FOB in trade
terms?
a) Free on Board
b) Freight on Board
c) Free of Burden
d) Freight of Business
Answer: a)
Free on Board
Basel III and Capital Adequacy Framework (2015)
11.
What is the minimum Capital Adequacy Ratio
(CAR) required under Basel III?
12.
Which of the following is a key component
of Basel III?
a) Leverage Ratio
b) Liquidity Coverage Ratio (LCR)
c) Net Stable Funding Ratio (NSFR)
d) All of the above
Answer: d)
All of the above
13.
What is the purpose of the Liquidity
Coverage Ratio (LCR)?
a) To ensure banks have enough liquid assets to survive a 30-day stress
scenario
b) To measure the bank's profitability
c) To assess the bank's credit risk
d) To calculate the bank's capital adequacy
Answer: a)
To ensure banks have enough liquid assets to survive a 30-day stress scenario
14.
Under Basel III, what is the minimum Tier
1 capital requirement?
15.
What is the Net Stable Funding Ratio
(NSFR) designed to measure?
a) A bank's long-term liquidity
b) A bank's short-term liquidity
c) A bank's profitability
d) A bank's credit risk
Answer: a)
A bank's long-term liquidity
General Banking Knowledge
16.
What is the full form of NPA in banking?
a) Non-Performing Asset
b) Non-Productive Account
c) Non-Payment Account
d) Non-Performing Account
Answer: a)
Non-Performing Asset
17.
Which of the following is a function of
Nepal Rastra Bank?
a) Issuing currency
b) Regulating banks and financial institutions
c) Formulating monetary policy
d) All of the above
Answer: d)
All of the above
18.
What is the primary objective of monetary
policy?
a) To control inflation
b) To regulate foreign exchange
c) To manage fiscal deficit
d) To increase government revenue
Answer: a)
To control inflation
19.
What is the full form of RTGS?
a) Real-Time Gross Settlement
b) Real-Time Government Settlement
c) Real-Time Gross System
d) Real-Time Government System
Answer: a)
Real-Time Gross Settlement
21.
What is the full form of SWIFT?
a) Society for Worldwide Interbank Financial Telecommunication
b) Secure Worldwide Interbank Financial Transfer
c) Society for Worldwide International Financial Transactions
d) Secure Worldwide International Financial Telecommunication
Answer: a)
Society for Worldwide Interbank Financial Telecommunication
22.
What is the purpose of a Standby Letter of
Credit (SBLC)?
a) To guarantee payment in case of default
b) To provide insurance for goods
c) To act as a payment instrument
d) To serve as a contract between buyer and seller
Answer: a)
To guarantee payment in case of default
23.
What is the full form of LIBOR?
a) London Interbank Offered Rate
b) London International Bank Offered Rate
c) London Interbank Operating Rate
d) London International Bank Operating Rate
Answer: a)
London Interbank Offered Rate
24.
What is the purpose of a credit rating
agency?
a) To assess the creditworthiness of borrowers
b) To provide loans to customers
c) To manage a bank's treasury
d) To regulate financial markets
Answer: a)
To assess the creditworthiness of borrowers
25.
What is the full form of IFSC?
a) Indian Financial System Code
b) International Financial System Code
c) Indian Foreign System Code
d) International Foreign System Code
Answer: a)
Indian Financial System Code
Treasury Management (26-35)
- What is
the primary goal of treasury risk management?
a) Maximizing profits
b) Minimizing risks related to liquidity, interest rates, and foreign exchange
c) Increasing customer deposits
d) Expanding branch networks
Answer: b) Minimizing risks related to liquidity, interest rates, and foreign exchange
- Which of
the following is a treasury instrument used for hedging foreign exchange
risk?
a) Forward Contracts
b) Bonds
c) Equity Shares
d) Mutual Funds
Answer: a) Forward Contracts
- What is
the role of a treasury in managing a bank's investment portfolio?
a) To maximize returns while maintaining liquidity
b) To approve loan applications
c) To manage customer relationships
d) To conduct market research
Answer: a) To maximize returns while maintaining liquidity
- What is
the purpose of a Repo Rate in treasury operations?
a) To manage short-term liquidity
b) To regulate foreign exchange rates
c) To determine loan interest rates
d) To calculate capital adequacy
Answer: a) To manage short-term liquidity (Check Repo Rate also from NRB)
- Which of
the following is a key function of treasury management in a bank?
a) Marketing bank products
b) Managing the bank's balance sheet
c) Approving loan applications
d) Conducting audits
Answer: b) Managing the bank's balance sheet
- What is
the full form of ALM in treasury management?
a) Asset Liability Management
b) Annual Liquidity Management
c) Asset Loan Management
d) Annual Liability Management
Answer: a) Asset Liability Management
- What is
the purpose of a treasury bill (T-bill)?
a) To raise short-term funds for the government
b) To provide long-term loans to businesses
c) To manage foreign exchange reserves
d) To regulate interest rates
Answer: a) To raise short-term funds for the government
- Which of
the following is a treasury instrument used for managing interest rate
risk?
a) Interest Rate Swaps
b) Bonds
c) Equity Shares
d) Mutual Funds
Answer: a) Interest Rate Swaps
- What is
the primary purpose of a bank's treasury in managing foreign exchange
reserves?
a) To stabilize the currency
b) To increase profits from forex trading
c) To approve loan applications
d) To manage customer deposits
Answer: a) To stabilize the currency
- What is
the full form of FX in treasury operations?
a) Foreign Exchange
b) Financial Exchange
c) Forex Exchange
d) Fixed Exchange
Answer: a) Foreign Exchange
Trade Finance (36-50)
- What is
the purpose of a Bank Guarantee in trade finance?
a) To ensure payment to the seller in case of default
b) To provide insurance for goods
c) To act as a payment instrument
d) To serve as a contract between buyer and seller
Answer: a) To ensure payment to the seller in case of default
- Which of
the following is a key document in export trade?
a) Commercial Invoice
b) Bill of Lading
c) Certificate of Origin
d) All of the above
Answer: d) All of the above
- What is
the full form of D/P in trade terms?
a) Documents against Payment
b) Delivery against Payment
c) Documents against Purchase
d) Delivery against Purchase
Answer: a) Documents against Payment
- What is
the purpose of a Certificate of Origin in trade finance?
a) To certify the country where the goods were produced
b) To provide insurance for goods
c) To act as a payment instrument
d) To serve as a contract between buyer and seller
Answer: a) To certify the country where the goods were produced
- Which of
the following is a risk covered under export credit insurance?
a) Political risk
b) Commercial risk
c) Currency risk
d) All of the above
Answer: d) All of the above
- What is
the full form of CIF in trade terms?
a) Cost, Insurance, and Freight
b) Cost, Interest, and Freight
c) Cost, Insurance, and Fuel
d) Cost, Interest, and Fuel
Answer: a) Cost, Insurance, and Freight
- What is
the purpose of a Bill of Exchange in trade finance?
a) To act as a payment instrument
b) To provide insurance for goods
c) To serve as a contract between buyer and seller
d) To certify the origin of goods
Answer: a) To act as a payment instrument
- Which of
the following is a key feature of a Letter of Credit (LC)?
a) It guarantees payment to the seller
b) It provides insurance for goods
c) It acts as a contract between buyer and seller
d) It certifies the origin of goods
Answer: a) It guarantees payment to the seller
- What is
the full form of UCP in trade finance?
a) Uniform Customs and Practice for Documentary Credits
b) Universal Credit Practice
c) Uniform Credit Policy
d) Universal Customs Policy
Answer: a) Uniform Customs and Practice for Documentary Credits
- What is
the purpose of a Standby Letter of Credit (SBLC)?
a) To guarantee payment in case of default
b) To provide insurance for goods
c) To act as a payment instrument
d) To serve as a contract between buyer and seller
Answer: a) To guarantee payment in case of default
- Which of
the following is a key document in import trade?
a) Bill of Entry
b) Bill of Lading
c) Commercial Invoice
d) All of the above
Answer: d) All of the above
- What is
the full form of EXW in trade terms?
a) Ex Works
b) Ex Warehouse
c) Ex Factory
d) Ex Yard
Answer: a) Ex Works - What is
the purpose of a Packing List in trade finance?
a) To detail the contents of a shipment
b) To provide insurance for goods
c) To act as a payment instrument
d) To serve as a contract between buyer and seller
Answer: a) To detail the contents of a shipment
- Which of
the following is a key feature of a Documentary Collection?
a) It involves the exchange of documents for payment
b) It provides insurance for goods
c) It acts as a contract between buyer and seller
d) It certifies the origin of goods
Answer: a) It involves the exchange of documents for payment
- What is
the full form of D/A in trade terms?
a) Documents against Acceptance
b) Delivery against Acceptance
c) Documents against Agreement
d) Delivery against Agreement
Answer: a) Documents against Acceptance
Basel III and Capital Adequacy Framework (51-65)
- What is
the minimum Common Equity Tier 1 (CET1) capital requirement under Basel
III?
- What is
the purpose of the Leverage Ratio under Basel III?
a) To limit excessive borrowing by banks
b) To measure the bank's profitability
c) To assess the bank's credit risk
d) To calculate the bank's capital adequacy
Answer: a) To limit excessive borrowing by banks
- What is
the full form of NSFR under Basel III?
a) Net Stable Funding Ratio
b) Net Short-term Funding Ratio
c) Net Stable Financial Ratio
d) Net Short-term Financial Ratio
Answer: a) Net Stable Funding Ratio
- What is
the minimum Liquidity Coverage Ratio (LCR) requirement under Basel III?
- What is
the purpose of the Countercyclical Capital Buffer under Basel III?
a) To protect banks during periods of excessive credit growth
b) To measure the bank's profitability
c) To assess the bank's credit risk
d) To calculate the bank's capital adequacy
Answer: a) To protect banks during periods of excessive credit growth
- What is
the full form of CAR in banking?
a) Capital Adequacy Ratio
b) Credit Assessment Ratio
c) Capital Allocation Ratio
d) Credit Adequacy Ratio
Answer: a) Capital Adequacy Ratio
- What is
the minimum Tier 2 capital requirement under Basel III?
- What is
the purpose of the Capital Conservation Buffer under Basel III?
a) To ensure banks maintain a buffer of capital during stress periods
b) To measure the bank's profitability
c) To assess the bank's credit risk
d) To calculate the bank's capital adequacy
Answer: a) To ensure banks maintain a buffer of capital during stress periods
- What is
the full form of CET1 under Basel III?
a) Common Equity Tier 1
b) Capital Equity Tier 1
c) Common Equity Tax 1
d) Capital Equity Tax 1
Answer: a) Common Equity Tier 1
- What is
the minimum Total Capital Ratio requirement under Basel III?
- What is
the purpose of the Risk-Weighted Assets (RWA) calculation under Basel III?
a) To determine the minimum capital required based on risk exposure
b) To measure the bank's profitability
c) To assess the bank's credit risk
d) To calculate the bank's liquidity
Answer: a) To determine the minimum capital required based on risk exposure
- What is
the full form of LCR under Basel III?
a) Liquidity Coverage Ratio
b) Loan Coverage Ratio
c) Liquidity Capital Ratio
d) Loan Capital Ratio
Answer: a) Liquidity Coverage Ratio
- What is
the purpose of the G-SIB buffer under Basel III?
a) To require additional capital from globally systemically important banks
b) To measure the bank's profitability
c) To assess the bank's credit risk
d) To calculate the bank's liquidity
Answer: a) To require additional capital from globally systemically important banks
- What is
the full form of CCyB under Basel III?
a) Countercyclical Capital Buffer
b) Credit Cyclical Buffer
c) Capital Cyclical Buffer
d) Credit Countercyclical Buffer
Answer: a) Countercyclical Capital Buffer
- What is
the purpose of the Leverage Ratio under Basel III?
a) To limit excessive borrowing by banks
b) To measure the bank's profitability
c) To assess the bank's credit risk
d) To calculate the bank's capital adequacy
Answer: a) To limit excessive borrowing by banks
General Banking Knowledge (66-100)
- What is
the full form of NEFT?
a) National Electronic Funds Transfer
b) National Electronic Financial Transaction
c) Nepal Electronic Funds Transfer
d) National Economic Funds Transfer
Answer: a) National Electronic Funds Transfer - What is
the purpose of a SWIFT code in banking?
a) To identify a specific bank during international transactions
b) To track domestic transactions
c) To manage ATM networks
d) To regulate interest rates
Answer: a) To identify a specific bank during international transactions
- What is
the full form of IFSC?
a) Indian Financial System Code
b) International Financial System Code
c) Indian Foreign System Code
d) International Foreign System Code
Answer: a) Indian Financial System Code
- What is
the purpose of a credit rating agency?
a) To assess the creditworthiness of borrowers
b) To provide loans to customers
c) To manage a bank's treasury
d) To regulate financial markets
Answer: a) To assess the creditworthiness of borrowers
- What is
the full form of LIBOR?
a) London Interbank Offered Rate
b) London International Bank Offered Rate
c) London Interbank Operating Rate
d) London International Bank Operating Rate
Answer: a) London Interbank Offered Rate
MCQs with Answers on Company Act 2063
1. What is the primary legislation
governing companies in Nepal?
a) Company Act 2053
b) Company Act 2063
c) Company Act 2074
d) Company Act 2048
Answer: b)
Company Act 2063
2. Which authority is responsible for
the registration of companies in Nepal?
a) Nepal Rastra Bank
b) Office of the Company Registrar
c) Department of Industry
d) Securities Board of Nepal
Answer: b)
Office of the Company Registrar
3. What is the minimum number of
shareholders required to form a private company?
a) 1
b) 2
c) 5
d) 7
Answer: a)
1
4. What is the minimum number of
shareholders required to form a public company?
a) 1
b) 3
c) 7
d) 11
Answer: c)
7
5. What is the minimum paid-up capital
required for a private company?
a) NPR 100,000
b) NPR 500,000
c) NPR 1,000,000
d) NPR 10,000,000
Answer: a)
NPR 100,000
6. What is the minimum paid-up capital
required for a public company?
a) NPR 500,000
b) NPR 1,000,000
c) NPR 10,000,000
d) NPR 50,000,000
Answer: c)
NPR 10,000,000
7. Which of the following documents is
required for company registration?
a) Memorandum of Association
b) Articles of Association
c) Both (a) and (b)
d) None of the above
Answer: c)
Both (a) and (b)
8. What is the maximum number of
shareholders in a private company?
a) 50
b) 101
c) 200
d) No limit
Answer: b)
101
9. What is the maximum number of
shareholders in a public company?
a) 50
b) 100
c) 200
d) No limit
Answer: d)
No limit
10. Who is responsible for the
day-to-day management of a company?
a) Shareholders
b) Board of Directors
c) Company Registrar
d) Auditor
Answer: b)
Board of Directors
11. What is the term of office for a
director in a company?
a) 1 year
b) 2 years
c) 4 years
d) 5 years
Answer: d)
5 years
12. What is the quorum required for a
general meeting of shareholders?
a) 25% of shareholders
b) 50% of shareholders
c) 75% of shareholders
d) As specified in the Articles of Association
Answer: d)
As specified in the Articles of Association
13. What is the voting right of a
shareholder in a company?
a) One vote per share
b) One vote per shareholder
c) No voting rights
d) Voting rights as per the Articles of Association
Answer: a)
One vote per share
14. What is the penalty for
non-compliance with the Company Act 2063?
a) Fine only
b) Imprisonment only
c) Both fine and imprisonment
d) Cancellation of company registration
Answer: c)
Both fine and imprisonment
15. What is the role of an auditor in a
company?
a) To manage daily operations
b) To prepare financial statements
c) To verify financial records and report to shareholders
d) To represent the company in legal matters
Answer: c)
To verify financial records and report to shareholders
16. What is the maximum number of
directors in a private company?
a) 5
b) 10
c) 15
d) No limit
Answer: d)
No limit
17. What is the maximum number of
directors in a public company?
a) 5
b) 10
c) 15
d) No limit
Answer: d)
No limit
18. What is the minimum age requirement
for a company director?
a) 16 years
b) 18 years
c) 21 years
d) 25 years
Answer: c)
21 years
19. What is the purpose of the Articles
of Association?
a) To define the company's internal management rules
b) To define the company's objectives and scope of business
c) To appoint directors
d) To issue shares
Answer: a)
To define the company's internal management rules
20. What is the time limit for
submitting annual financial statements to the Company Registrar?
a) 3 months from the end of the fiscal year
b) 6 months from the end of the fiscal year
c) 9 months from the end of the fiscal year
d) 12 months from the end of the fiscal year
Answer: b)
6 months from the end of the fiscal year
21. What is the penalty for failing to
submit annual financial statements on time?
a) Fine only
b) Imprisonment only
c) Both fine and imprisonment
d) Cancellation of company registration
Answer: a)
Fine only
22. What is the minimum notice period
for calling a general meeting of shareholders?
a) 7 days
b) 15 days
c) 21 days
d) 30 days
Answer: c)
21 days
23. What is the purpose of a proxy in a
general meeting?
a) To represent a shareholder who cannot attend
b) To manage the company's finances
c) To audit the company's accounts
d) To appoint directors
Answer: a)
To represent a shareholder who cannot attend
24. What is the maximum number of
proxies a person can hold in a general meeting?
a) 1
b) 2
c) 5
d) No limit
Answer: d)
No limit
25. What is the role of the Company
Registrar?
a) To manage the company's finances
b) To register and regulate companies
c) To audit the company's accounts
d) To represent the company in legal matters
Answer: b)
To register and regulate companies
26. What is the time limit for
registering a company after receiving the application?
a) 7 days
b) 15 days
c) 21 days
d) 30 days
Answer: b)
15 days
27. What is the penalty for providing
false information during company registration?
a) Fine only
b) Imprisonment only
c) Both fine and imprisonment
d) Cancellation of company registration
Answer: c)
Both fine and imprisonment
28. What is the maximum number of
members in a partnership firm as per the Company Act 2063?
a) 20
b) 50
c) 100
d) No limit
Answer: b)
50
33. What is the purpose of the Memorandum
of Association?
a) To define the company's internal management rules
b) To define the company's objectives and scope of business
c) To appoint directors
d) To issue shares
Answer: b)
To define the company's objectives and scope of business
______________________________________________________
International Monetary Fund (IMF)
1. What is the primary purpose of the IMF?
a) Promote global trade
b) Ensure financial stability and economic cooperation
c) Provide long-term development loans
d) Regulate international banking
Answer: b) Ensure financial stability and economic cooperation
2. When was the IMF established?
a) 1944
b) 1950
c) 1960
d) 1971
3. Where is the IMF headquartered?
a) New York, USA
b) Washington, D.C., USA
c) Geneva, Switzerland
d) Paris, France
Answer: b) Washington, D.C., USA
4. What is the IMF's Special Drawing Rights (SDR)?
a) A loan repayment system
b) An international reserve asset
c) A type of currency exchange rate
d) A trade tariff reduction tool
Answer: b) An international reserve asset
5. Which of the following is NOT a key function of the IMF?
a) Providing loans to countries in financial distress
b) Promoting exchange rate stability
c) Setting global trade tariffs
d) Offering technical assistance
Answer: c) Setting global trade tariffs
---
# World Bank
6. What is the primary focus of the World Bank?
a) Short-term financial stability
b) Long-term development and poverty reduction
c) Regulating global trade
d) Currency exchange management
Answer: b) Long-term development and poverty reduction
7. When was the World Bank founded?
a) 1930
b) 1944
c) 1955
d) 1965
Answer: b) 1944
8. Which institution is NOT part of the World Bank Group?
a) International Bank for Reconstruction and Development (IBRD)
b) International Development Association (IDA)
c) International Monetary Fund (IMF)
d) Multilateral Investment Guarantee Agency (MIGA)
Answer: c) International Monetary Fund (IMF)
9. Where is the World Bank headquartered?
a) London, UK
b) Washington, D.C., USA
c) Tokyo, Japan
d) Brussels, Belgium
Answer: b) Washington, D.C., USA
10. What type of loans does the World Bank primarily provide?
a) Short-term emergency loans
b) Long-term development loans
c) Trade financing loans
d) Currency stabilization loans
Answer: b) Long-term development loans
---
# World Trade Organization (WTO)
11. What is the main goal of the WTO?
a) To stabilize global currencies
b) To promote free and fair international trade
c) To provide development loans
d) To regulate global stock markets
Answer: b) To promote free and fair international trade
12. When was the WTO established?
a) 1947
b) 1980
c) 1995
d) 2000
Answer: c) 1995
13. What organization did the WTO replace?
a) General Agreement on Tariffs and Trade (GATT)
b) International Monetary Fund (IMF)
c) World Bank
d) United Nations Trade Organization
Answer: a) General Agreement on Tariffs and Trade (GATT)
14. Where is the WTO headquartered?
a) New York, USA
b) Geneva, Switzerland
c) Paris, France
d) London, UK
Answer: b) Geneva, Switzerland
15. Which of the following is a key function of the WTO?
a) Providing financial aid to poor countries
b) Settling trade disputes between member countries
c) Issuing global currency
d) Regulating international banking
Answer: b) Settling trade disputes between member countries
---
# Federal Reserve (Fed)
16. What is the Federal Reserve?
a) The central bank of the United States
b) A global financial institution
c) A trade regulation body
d) A development loan agency
Answer: a) The central bank of the United States
17. When was the Federal Reserve established?
a) 1900
b) 1913
c) 1930
d) 1945
Answer: b) 1913
18. What is the primary tool used by the Fed to control the money supply?
a) Tax policy
b) Interest rates
c) Trade tariffs
d) Foreign aid
Answer: b) Interest rates
19. Where is the Federal Reserve headquartered?
a) New York, USA
b) Washington, D.C., USA
c) Chicago, USA
d) San Francisco, USA
Answer: b) Washington, D.C., USA
20. What is the Fed’s dual mandate?
a) Promote trade and development
b) Stabilize prices and maximize employment
c) Reduce taxes and increase exports
d) Control inflation and regulate banks
Answer: b) Stabilize prices and maximize employment
---
# Mixed Questions (IMF, World Bank, WTO, Fed)
21. Which organization focuses on reducing poverty through infrastructure projects?
a) IMF
b) World Bank
c) WTO
d) Fed
Answer: b) World Bank
22. Which organization uses monetary policy to influence the U.S. economy?
a) IMF
b) World Bank
c) WTO
d) Fed
Answer: d) Fed
23. Which organization was created to replace GATT?
a) IMF
b) World Bank
c) WTO
d) Fed
Answer: c) WTO
24. Which organization provides short-term financial assistance to countries with balance of payments issues?
a) IMF
b) World Bank
c) WTO
d) Fed
Answer: a) IMF
25. Which of these organizations is NOT headquartered in Washington, D.C.?
a) IMF
b) World Bank
c) WTO
d) Fed
Answer: c) WTO
26. Which organization oversees the rules of international trade?
a) IMF
b) World Bank
c) WTO
d) Fed
Answer: c) WTO
27. Which organization was established first?
a) IMF
b) World Bank
c) WTO
d) Fed
Answer: d) Fed (1913)
28. Which organization issues Special Drawing Rights (SDRs)?
a) IMF
b) World Bank
c) WTO
d) Fed
Answer: a) IMF
29. Which organization operates only within the United States?
a) IMF
b) World Bank
c) WTO
d) Fed
Answer: d) Fed
30. Which organization mediates trade disputes?
a) IMF
b) World Bank
c) WTO
d) Fed
Answer: c) WTO
---
# Additional Questions
31. What is a common criticism of the IMF?
a) It focuses too much on trade
b) Its loan conditions impose harsh austerity measures
c) It only helps developed nations
d) It regulates global banking
Answer: b) Its loan conditions impose harsh austerity measures
32. Which World Bank institution provides interest-free loans to the poorest countries?
a) IBRD
b) IDA
c) IFC
d) MIGA
Answer: b) IDA
33. What does the WTO’s “Most Favored Nation” principle mean?
a) Countries must favor one trading partner over others
b) Trade benefits given to one member must apply to all
c) Only developed nations receive trade benefits
d) Tariffs must be eliminated completely
Answer: b) Trade benefits given to one member must apply to all
34. What Fed action increases the money supply?
a) Raising interest rates
b) Selling government bonds
c) Buying government bonds
d) Increasing taxes
Answer: c) Buying government bonds
35. Which organization conducts “Article IV consultations”?
a) IMF
b) World Bank
c) WTO
d) Fed
Answer: a) IMF
36. Which organization funds projects like dams and roads?
a) IMF
b) World Bank
c) WTO
d) Fed
Answer: b) World Bank
37. Which organization has 164 member countries as of 2025?
a) IMF
b) World Bank
c) WTO
d) Fed
Answer: c) WTO
38. What is the Fed’s main interest rate tool?
a) Federal Funds Rate
b) Prime Rate
c) Discount Rate
d) Libor Rate
Answer: a) Federal Funds Rate
39. Which organization monitors global economic trends?
a) IMF
b) World Bank
c) WTO
d) Fed
Answer: a) IMF
40. Which organization helps countries recover from natural disasters with loans?
a) IMF
b) World Bank
c) WTO
d) Fed
Answer: b) World Bank
41. What does the WTO’s TRIPS agreement cover?
a) Trade tariffs
b) Intellectual property rights
c) Currency exchange
d) Loan repayments
Answer: b) Intellectual property rights
42. Which Fed body sets monetary policy?
a) Board of Governors
b) Federal Open Market Committee (FOMC)
c) Regional Banks
d) Treasury Department
Answer: b) Federal Open Market Committee (FOMC)
43. Which organization was heavily involved in post-WWII reconstruction?
a) IMF
b) World Bank
c) WTO
d) Fed
Answer: b) World Bank
44. Which organization uses “conditionality” in its lending practices?
a) IMF
b) World Bank
c) WTO
d) Fed
Answer: a) IMF
45. Which organization negotiates trade agreements like the Doha Round?
a) IMF
b) World Bank
c) WTO
d) Fed
Answer: c) WTO
46. What is the Fed’s role during a financial crisis?
a) Provide trade assistance
b) Act as a lender of last resort
c) Fund infrastructure projects
d) Stabilize exchange rates
Answer: b) Act as a lender of last resort
47. Which organization publishes the “World Economic Outlook”?
a) IMF
b) World Bank
c) WTO
d) Fed
Answer: a) IMF
48. Which organization supports private sector investment in developing countries?
a) IMF
b) World Bank (IFC)
c) WTO
d) Fed
Answer: b) World Bank (IFC)
49. Which organization enforces trade sanctions?
a) IMF
b) World Bank
c) WTO
d) Fed
Answer: c) WTO
50. Which organization was created under the Bretton Woods system?
a) IMF and World Bank
b) WTO
c) Fed
d) WTO and Fed
Answer: a) IMF and World Bank
_______________________
-----------------------------------
Multiple Choice Questions (MCQs) on SWIFT and Trade Finance in Nepalese Banking
Section 1: SWIFT Basics
1. What does SWIFT stand for in the context of international banking?
a) Society for Worldwide International Financial Transactions
b) Society for Worldwide Interbank Financial Telecommunication
c) System for Worldwide Interbank Fund Transfers
d) Standard Worldwide International Financial Technology
Answer: b) Society for Worldwide Interbank Financial Telecommunication
2. In Nepal, which institution regulates the use of SWIFT for banks?
a) Nepal Rastra Bank (NRB)
b) Ministry of Finance
c) Nepal Bank Limited
d) Securities Board of Nepal (SEBON)
Answer: a) Nepal Rastra Bank (NRB)
3. What is the primary purpose of SWIFT in Nepalese banking?
a) To issue loans to exporters
b) To facilitate secure and standardized international payments
c) To regulate foreign exchange rates
d) To monitor domestic transactions
Answer: b) To facilitate secure and standardized international payments
4. How many characters are typically in a SWIFT code used by Nepalese banks?
a) 6
b) 8 or 11
c) 10
d) 12
Answer: b) 8 or 11
5. Which of the following is NOT part of a SWIFT code?
a) Bank Identifier
b) Country Code
c) Currency Code
d) Branch Code
Answer: c) Currency Code
6. Which Nepalese bank was the first to integrate with the SWIFT network?
a) Nepal Bank Limited
b) RastriyaBanijya Bank
c) Nabil Bank
d) Himalayan Bank
Answer: c) Nabil Bank
7. What is the SWIFT code format for a Nepalese bank like Nabil Bank (e.g., NARBNPKA)?
a) 4 letters (bank) + 2 letters (country) + 2 letters/numbers (location) + optional 3 (branch)
b) 3 letters (bank) + 3 numbers (country) + 2 letters (branch)
c) 5 letters (bank) + 1 number (country) + 2 letters (location)
d) 6 letters (bank) + 2 numbers (branch)
Answer: a) 4 letters (bank) + 2 letters (country) + 2 letters/numbers (location) + optional 3 (branch)
8. SWIFT messages are primarily used for:
a) Domestic fund transfers in Nepal
b) Cross-border payments and trade finance instructions
c) Issuing credit cards
d) Managing ATM networks
Answer: b) Cross-border payments and trade finance instructions
9. In Nepal, SWIFT is mandatory for:
a) All domestic transactions
b) International remittances and trade transactions
c) Microfinance lending
d) Government salary payments
Answer: b) International remittances and trade transactions
10. Which SWIFT message type is commonly used for payment instructions?
a) MT103
b) MT202
c) MT300
d) MT900
Answer: a) MT103
---
Section 2: Trade Finance Basics
11. What is the primary role of trade finance in Nepalese banking?
a) To provide consumer loans
b) To facilitate international trade by mitigating risks
c) To regulate interest rates
d) To issue government bonds
Answer: b) To facilitate international trade by mitigating risks
12. Which Nepalese bank is most active in trade finance for exports like carpets and garments?
a) Nepal Bank Limited
b) RastriyaBanijya Bank
c) Himalayan Bank
d) NMB Bank
Answer: c) Himalayan Bank
13. In Nepal, trade finance is heavily reliant on which international system for payments?
a) PayPal
b) SWIFT
c) Western Union
d) Nepal Clearing House
Answer: b) SWIFT
14. What is a Letter of Credit (LC) in trade finance?
a) A loan agreement between banks
b) A bank’s guarantee to pay the seller on behalf of the buyer
c) A certificate of deposit
d) A foreign exchange contract
Answer: b) A bank’s guarantee to pay the seller on behalf of the buyer
15. Which document is NOT typically required in a Letter of Credit transaction in Nepal?
a) Bill of Lading
b) Commercial Invoice
c) Personal Loan Agreement
d) Certificate of Origin
Answer: c) Personal Loan Agreement
16. In Nepal, what is the main purpose of a Bill of Exchange in trade finance?
a) To secure a loan
b) To promise payment at a future date
c) To transfer property ownership
d) To issue shares
Answer: b) To promise payment at a future date
17. Which trade finance instrument is most used for Nepal’s imports from India?
a) Open Account
b) Letter of Credit
c) Cash in Advance
d) Documentary Collection
Answer: b) Letter of Credit
18. What does "Incoterms" stand for in trade finance?
a) International Commercial Terms
b) Indian Commerce Terms
c) Internal Cost Terms
d) Integrated Credit Terms
Answer: a) International Commercial Terms
19. Which Incoterm places the maximum responsibility on the seller?
a) EXW (Ex Works)
b) FOB (Free on Board)
c) DDP (Delivered Duty Paid)
d) CIF (Cost, Insurance, Freight)
Answer: c) DDP (Delivered Duty Paid)
20. In Nepal, trade finance supports which major export?
a) Rice
b) Pashmina
c) Electronics
d) Automobiles
Answer: b) Pashmina
---
Section 3: SWIFT and Trade Finance Integration
21. How does SWIFT support trade finance in Nepal?
a) By providing loans directly to exporters
b) By enabling secure communication for LCs and payments
c) By regulating export tariffs
d) By issuing trade licenses
Answer: b) By enabling secure communication for LCs and payments
22. Which SWIFT message type is used for a Letter of Credit issuance?
a) MT700
b) MT103
c) MT202
d) MT940
Answer: a) MT700
23. In Nepal, which bank acts as a correspondent bank for SWIFT transactions with India?
a) Nepal Bank Limited
b) State Bank of India (Nepal Branch)
c) RastriyaBanijya Bank
d) NIC Asia Bank
Answer: b) State Bank of India (Nepal Branch)
24. What is the role of a confirming bank in a Nepalese LC transaction?
a) To issue the LC
b) To add its payment guarantee to the issuing bank’s LC
c) To transport goods
d) To collect customs duties
Answer: b) To add its payment guarantee to the issuing bank’s LC
25. Which SWIFT message type confirms a payment has been made?
a) MT900
b) MT910
c) MT700
d) MT300
Answer: b) MT910
26. In Nepal, trade finance via SWIFT is most critical for transactions with:
a) China and India
b) USA and UK
c) Japan and Australia
d) Bhutan and Bangladesh
Answer: a) China and India
27. What is a Documentary Collection in trade finance?
a) A loan for exporters
b) A method where banks handle shipping documents against payment
c) A type of insurance policy
d) A SWIFT message type
Answer: b) A method where banks handle shipping documents against payment
28. Which SWIFT message is used for a Documentary Collection instruction?
a) MT400
b) MT700
c) MT103
d) MT202
Answer: a) MT400
29. In Nepal, what is the main risk mitigated by trade finance?
a) Interest rate fluctuation
b) Non-payment by foreign buyers
c) Currency depreciation
d) Domestic competition
Answer: b) Non-payment by foreign buyers
30. Which Nepalese authority oversees SWIFT compliance for trade finance?
a) Nepal Rastra Bank
b) Ministry of Commerce
c) Nepal Customs Service
d) Nepal Trade Promotion Centre
Answer: a) Nepal Rastra Bank
---
Section 4: Practical Applications in Nepal
31. Nepal primarily uses SWIFT for trade with which country for hydropower equipment imports?
a) China
b) USA
c) Japan
d) Germany
Answer: a) China
32. What is the most common trade finance method for Nepal’s tea exports?
a) Cash in Advance
b) Letter of Credit
c) Open Account
d) Consignment
Answer: b) Letter of Credit
33. Which Nepalese bank pioneered joint-venture trade finance operations with SWIFT?
a) Nabil Bank
b) Nepal SBI Bank
c) Everest Bank
d) Standard Chartered Bank Nepal
Answer: a) Nabil Bank
34. In Nepal, a Sight LC means payment is made:
a) After 90 days
b) Upon presentation of documents
c) After goods are delivered
d) Before shipment
Answer: b) Upon presentation of documents
35. Which document is critical for Nepal’s customs clearance in trade finance?
a) Certificate of Origin
b) Personal ID
c) Bank Statement
d) Loan Agreement
Answer: a) Certificate of Origin
36. What is the role of Nepal Rastra Bank in SWIFT-based trade finance?
a) Issuing LCs
b) Regulating foreign exchange and SWIFT usage
c) Transporting goods
d) Collecting taxes
Answer: b) Regulating foreign exchange and SWIFT usage
37. Which SWIFT message type is used for foreign exchange transactions?
a) MT300
b) MT103
c) MT700
d) MT900
Answer: a) MT300
38. Nepal’s trade deficit is largely financed through:
a) Domestic loans
b) Remittances and trade finance
c) Government bonds
d) Foreign aid only
Answer: b) Remittances and trade finance
39. What is a Usance LC in Nepal’s trade finance context?
a) Payment at sight
b) Payment deferred to a future date
c) Payment before shipment
d) Payment after customs clearance
Answer: b) Payment deferred to a future date
40. Which Nepalese export benefits most from SWIFT-based trade finance?
a) Rice
b) Handicrafts
c) Automobiles
d) Software
Answer: b) Handicrafts
---
Section 5: Advanced Concepts
41. What is the SWIFT GPI initiative, and how does it benefit Nepalese banks?
a) A loan program; increases credit access
b) Global Payments Innovation; enhances transparency and speed
c) A trade tariff system; reduces costs
d) A security protocol; prevents fraud
Answer: b) Global Payments Innovation; enhances transparency and speed
42. In Nepal, which risk is NOT covered by trade finance instruments?
a) Currency fluctuation
b) Non-delivery of goods
c) Political instability
d) Buyer’s credit risk
Answer: c) Political instability
43. What is the purpose of a Standby Letter of Credit (SBLC) in Nepal?
a) To finance daily operations
b) To act as a guarantee of payment in case of default
c) To issue bonds
d) To transfer property
Answer: b) To act as a guarantee of payment in case of default
44. Which SWIFT message type is used for SBLC issuance?
a) MT760
b) MT700
c) MT103
d) MT202
Answer: a) MT760
45. In Nepal, trade finance for imports from China often uses:
a) Open Account
b) Advance Payment
c) Letter of Credit
d) Consignment
Answer: c) Letter of Credit
46. What is the benefit of SWIFT’sMT798 message in trade finance?
a) Reduces interest rates
b) Enables electronic trade document exchange
c) Increases loan limits
d) Simplifies domestic transfers
Answer: b) Enables electronic trade document exchange
47. Which Nepalese bank collaborates with SWIFT for remittance inflows from the Gulf?
a) Global IME Bank
b) Nepal Bank Limited
c) RastriyaBanijya Bank
d) Kumari Bank
Answer: a) Global IME Bank
48. In Nepal, what is the main challenge for SWIFT-based trade finance?
a) Lack of internet access
b) Limited foreign exchange reserves
c) High domestic demand
d) Overregulation
Answer: b) Limited foreign exchange reserves
49. What is forfaiting in trade finance, and does Nepal use it?
a) Selling trade receivables; rarely used in Nepal
b) Issuing bonds; widely used
c) Providing loans; common in Nepal
d) Insurance for exports; mandatory
Answer: a) Selling trade receivables; rarely used in Nepal
50. Which international body sets standards for trade finance that Nepal follows?
a) World Trade Organization (WTO)
b) International Chamber of Commerce (ICC)
c) United Nations (UN)
d) Asian Development Bank (ADB)
Answer: b) International Chamber of Commerce (ICC)
=======================================
Trade Finance and Incoterms MCQs
1. What is the primary purpose of trade finance?
a) To increase tariffs on imported goods
b) To facilitate international trade by providing funding and risk mitigation
c) To regulate currency exchange rates
d) To enforce trade embargoes
Answer: b) To facilitate international trade by providing funding and risk mitigation
2. Which of the following is a common trade finance instrument?
a) Letter of Credit
b) Stock Certificate
c) Government Bond
d) Mortgage Agreement
Answer: a) Letter of Credit
3. What does a Letter of Credit (LC) guarantee?
a) The buyer’s creditworthiness
b) Payment to the seller upon meeting agreed terms
c) Free shipping of goods
d) Currency exchange stability
Answer: b) Payment to the seller upon meeting agreed terms
4. Who typically issues a Letter of Credit?
a) The buyer
b) The seller
c) A bank or financial institution
d) A shipping company
Answer: c) A bank or financial institution
5. What is a Bill of Lading?
a) A tax document for exported goods
b) A contract between buyer and seller
c) A document evidencing the receipt of goods for shipment
d) An invoice for payment
Answer: c) A document evidencing the receipt of goods for shipment
6. Which trade finance method involves a buyer paying for goods before shipment?
a) Open Account
b) Cash in Advance
c) Documentary Collection
d) Letter of Credit
Answer: b) Cash in Advance
7. In an Open Account transaction, who bears the most risk?
a) The buyer
b) The seller
c) The bank
d) The shipping company
Answer: b) The seller
8. What is the role of an Export Credit Agency (ECA)?
a) To regulate shipping routes
b) To provide insurance and financing to promote exports
c) To collect import duties
d) To audit trade agreements
Answer: b) To provide insurance and financing to promote exports
9. What is factoring in trade finance?
a) Selling goods at a discount
b) Selling accounts receivable to a third party for immediate cash
c) Negotiating lower shipping costs
d) Issuing a Letter of Credit
Answer: b) Selling accounts receivable to a third party for immediate cash
10. Which document is used to instruct a bank to pay the seller in a Documentary Collection?
a) Bill of Exchange
b) Purchase Order
c) Insurance Certificate
d) Export License
Answer: a) Bill of Exchange
11. What does UCP 600 refer to?
a) A shipping regulation
b) Uniform Customs and Practice for Documentary Credits
c) A trade tariff code
d) An Incoterms rule
Answer: b) Uniform Customs and Practice for Documentary Credits
12. Which party assumes the credit risk in a confirmed Letter of Credit?
a) The buyer
b) The issuing bank
c) The confirming bank
d) The seller
Answer: c) The confirming bank
13. What is a standby Letter of Credit used for?
a) To guarantee shipment of goods
b) To act as a backup payment if the buyer fails to pay
c) To reduce shipping costs
d) To insure goods against damage
Answer: b) To act as a backup payment if the buyer fails to pay
14. Which trade finance method is least secure for the seller?
a) Cash in Advance
b) Open Account
c) Letter of Credit
d) Documentary Collection
Answer: b) Open Account
15. What is the purpose of trade credit insurance?
a) To cover shipping delays
b) To protect against buyer non-payment
c) To reduce import taxes
d) To guarantee product quality
Answer: b) To protect against buyer non-payment
16. What does forfaiting involve?
a) Financing short-term trade loans
b) Purchasing a seller’s receivables at a discount
c) Insuring goods during transit
d) Issuing Letters of Credit
Answer: b) Purchasing a seller’s receivables at a discount
17. Who typically pays the fees for a Letter of Credit?
a) The seller
b) The buyer
c) The shipping company
d) The customs authority
Answer: b) The buyer
18. What is a revolving Letter of Credit?
a) A one-time payment guarantee
b) A reusable credit facility for multiple shipments
c) A loan for shipping costs
d) A tax exemption document
Answer: b) A reusable credit facility for multiple shipments
19. Which organization publishes the rules for Letters of Credit?
a) World Trade Organization (WTO)
b) International Chamber of Commerce (ICC)
c) United Nations (UN)
d) International Monetary Fund (IMF)
Answer: b) International Chamber of Commerce (ICC)
20. What is a sight draft in Documentary Collection?
a) A demand for immediate payment upon presentation
b) A delayed payment agreement
c) A shipping insurance policy
d) A customs clearance form
Answer: a) A demand for immediate payment upon presentation
21. Which trade finance tool helps mitigate political risk?
a) Bill of Lading
b) Export Credit Insurance
c) Open Account
d) Factoring
Answer: b) Export Credit Insurance
22. What is the main advantage of using a Letter of Credit for the seller?
a) Lower shipping costs
b) Reduced customs duties
c) Assurance of payment from a bank
d) Faster delivery of goods
Answer: c) Assurance of payment from a bank
23. What does “aval” refer to in trade finance?
a) A type of shipping container
b) A bank’s guarantee on a Bill of Exchange
c) A tax refund process
d) An export license
Answer: b) A bank’s guarantee on a Bill of Exchange
24. Which method requires the buyer to trust the seller the most?
a) Cash in Advance
b) Open Account
c) Letter of Credit
d) Documentary Collection
Answer: a) Cash in Advance
25. What is the key benefit of supply chain finance?
a) Faster customs clearance
b) Improved cash flow for buyers and sellers
c) Reduced shipping times
d) Lower insurance premiums
Answer: b) Improved cash flow for buyers and sellers
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Incoterms Questions (26-50)
26. What does Incoterms stand for?
a) International Commerce Terms
b) International Container Terms
c) Integrated Commercial Terms
d) International Customs Terms
Answer: a) International Commerce Terms
27. Who publishes Incoterms?
a) World Bank
b) International Chamber of Commerce (ICC)
c) United Nations
d) World Trade Organization
Answer: b) International Chamber of Commerce (ICC)
28. Which Incoterm places the most responsibility on the seller?
a) EXW (Ex Works)
b) DDP (Delivered Duty Paid)
c) FOB (Free on Board)
d) CIF (Cost, Insurance, Freight)
Answer: b) DDP (Delivered Duty Paid)
29. Under EXW (Ex Works), who is responsible for loading the goods onto the transport?
a) The seller
b) The buyer
c) The carrier
d) The customs authority
Answer: b) The buyer
30. Which Incoterm requires the seller to arrange and pay for insurance?
a) FOB (Free on Board)
b) CIF (Cost, Insurance, Freight)
c) DAP (Delivered at Place)
d) FCA (Free Carrier)
Answer: b) CIF (Cost, Insurance, Freight)
31. What does FOB (Free on Board) mean?
a) The seller delivers goods to the buyer’s warehouse
b) The seller bears all costs until goods are loaded onto the ship
c) The buyer pays for insurance and freight
d) The goods are delivered duty paid
Answer: b) The seller bears all costs until goods are loaded onto the ship
32. Which Incoterm is exclusive to sea and inland waterway transport?
a) DAP (Delivered at Place)
b) FAS (Free Alongside Ship)
c) CPT (Carriage Paid To)
d) EXW (Ex Works)
Answer: b) FAS (Free Alongside Ship)
33. Under DDP (Delivered Duty Paid), who pays import duties?
a) The buyer
b) The seller
c) The shipping company
d) The customs broker
Answer: b) The seller
34. Which Incoterm transfers risk to the buyer once goods are handed to the carrier?
a) FCA (Free Carrier)
b) CIF (Cost, Insurance, Freight)
c) DDP (Delivered Duty Paid)
d) EXW (Ex Works)
Answer: a) FCA (Free Carrier)
35. What is the main difference between CIF and CFR?
a) CIF includes insurance, CFR does not
b) CFR includes customs duties, CIF does not
c) CIF is for air transport, CFR is for sea
d) CFR requires delivery to the buyer’s premises
Answer: a) CIF includes insurance, CFR does not
36. Which Incoterm requires the seller to deliver goods to a named place, unloaded?
a) DAP (Delivered at Place)
b) CPT (Carriage Paid To)
c) FOB (Free on Board)
d) EXW (Ex Works)
Answer: a) DAP (Delivered at Place)
37. Under CPT (Carriage Paid To), who is responsible for unloading costs?
a) The seller
b) The buyer
c) The carrier
d) The freight forwarder
Answer: b) The buyer
38. Which Incoterm is most suitable for multimodal transport?
a) FOB (Free on Board)
b) CIP (Carriage and Insurance Paid To)
c) FAS (Free Alongside Ship)
d) CIF (Cost, Insurance, Freight)
Answer: b) CIP (Carriage and Insurance Paid To)
39. When does the risk transfer to the buyer under FAS (Free Alongside Ship)?
a) When goods are loaded onto the ship
b) When goods are placed alongside the ship
c) When goods leave the seller’s premises
d) When goods arrive at the destination port
Answer: b) When goods are placed alongside the ship
40. Which Incoterm requires the buyer to handle export clearance?
a) EXW (Ex Works)
b) DDP (Delivered Duty Paid)
c) CIF (Cost, Insurance, Freight)
d) FCA (Free Carrier)
Answer: a) EXW (Ex Works)
41. What does DAT (Delivered at Terminal) mean in Incoterms 2010?
a) Goods are delivered to the buyer’s warehouse
b) Goods are delivered unloaded at a specified terminal
c) Goods are delivered alongside the ship
d) Goods are delivered duty paid
Answer: b) Goods are delivered unloaded at a specified terminal
42. Which Incoterm replaced DAT in Incoterms 2020?
a) DPU (Delivered at Place Unloaded)
b) DAP (Delivered at Place)
c) DDP (Delivered Duty Paid)
d) CPT (Carriage Paid To)
Answer: a) DPU (Delivered at Place Unloaded)
43. Under FCA (Free Carrier), who pays for main carriage?
a) The seller
b) The buyer
c) The carrier
d) The freight forwarder
Answer: b) The buyer
44. Which Incoterm requires the seller to contract for carriage but not insurance?
a) CPT (Carriage Paid To)
b) CIP (Carriage and Insurance Paid To)
c) CIF (Cost, Insurance, Freight)
d) DDP (Delivered Duty Paid)
Answer: a) CPT (Carriage Paid To)
45. What is the key difference between CIP and CIF?
a) CIP applies to all transport modes, CIF is sea-only
b) CIF includes unloading costs, CIP does not
c) CIP requires export clearance by the buyer
d) CIF is cheaper for the seller
Answer: a) CIP applies to all transport modes, CIF is sea-only
46. Under which Incoterm does the seller bear the least responsibility?
a) EXW (Ex Works)
b) DDP (Delivered Duty Paid)
c) CIF (Cost, Insurance, Freight)
d) FOB (Free on Board)
Answer: a) EXW (Ex Works)
47. Which Incoterm is commonly used in commodity trading?
a) FOB (Free on Board)
b) EXW (Ex Works)
c) DAP (Delivered at Place)
d) CPT (Carriage Paid To)
Answer: a) FOB (Free on Board)
48. Under DPU (Delivered at Place Unloaded), who is responsible for import clearance?
a) The seller
b) The buyer
c) The carrier
d) The customs broker
Answer: b) The buyer
49. Which Incoterm requires the seller to provide a commercial invoice and packing list?
a) All Incoterms
b) EXW (Ex Works) only
c) DDP (Delivered Duty Paid) only
d) CIF (Cost, Insurance, Freight) only
Answer: a) All Incoterms
50. What is the main purpose of Incoterms?
a) To set global trade tariffs
b) To define responsibilities between buyer and seller in international trade
c) To regulate shipping insurance
d) To standardize currency exchange rates
Answer: b) To define responsibilities between buyer and seller in international trade
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