Smart Contracts for Finance BFC Practice Questions (Page 9)

Questions 41–44

1. 41application · medium

   A fintech startup is about to deploy a smart contract that manages a peer-to-peer lending pool. During an internal audit, a developer notices that the contract's `withdraw` function can be re-entered before the user's balance is updated. The team must fix this before launch. Which remediation is the most appropriate?

   • AAdd a comment in the code warning users not to call the function twice in the same transaction.
   • BApply the checks-effects-interactions pattern by updating the user's balance before making any external calls.
   • CIncrease the gas limit for the `withdraw` function so that re-entrant calls run out of gas.
   • DMove the contract to a private blockchain where only known users can interact with it.
   Reveal Solution Discussion Select an answer first
2. 42application · medium

   A bank wants to deploy a smart contract for trade finance that automates letter-of-credit payments. The bank must comply with anti-money laundering (AML) regulations that require verifying the identity of parties before funds are released. Which design should the bank implement?

   • AIntegrate an identity verification step that must be completed off-chain before the smart contract releases payment.
   • BMake the smart contract automatically release funds without any identity checks to preserve decentralization.
   • CStore all customer identity documents on-chain so that the smart contract can verify them automatically.
   • DUse a public blockchain and assume that pseudonymous addresses satisfy AML requirements.
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4. 43application · medium

   A team is deploying a smart contract for a tokenized bond. The contract must allow the issuer to redeem the bond at maturity and pay investors. Which lifecycle event should trigger the redemption logic?

   • AAn oracle report of the current market price.
   • BA random number generated by the contract.
   • CA time-based condition that becomes true at the maturity date.
   • DA manual call from any token holder.
   Reveal Solution Discussion Select an answer first
5. 44application · medium

   A startup is building a smart contract for invoice factoring, where businesses sell unpaid invoices to investors. The contract must handle the transfer of ownership and the eventual settlement when the debtor pays. Which lifecycle phase is most critical to define clearly in the contract's state machine?

   • AThe termination of the contract after all invoices are settled.
   • BThe transition from 'funded' to 'settled' after the debtor's payment is confirmed.
   • CThe initial creation of the invoice on-chain.
   • DThe upgrade of the contract to a new version.
   Reveal Solution Discussion Select an answer first