CDCS Sample Test Questions

[tradecdcs]

Hi all,

Have the following questions need your help!

12. A transferable credit can do which of the following?
A Protect the applicant from the risks of loss and error.
B Allow the second beneficiary to obtain payment for complying documents.
C Restrict the right of the second beneficiary to claim payment directly from the nominated
bank.
D Permit the supplier to provide the intermediary trader with the security of a documentary
credit.

----> How is Option D wrong? Is it that 'supplier' shld be changed to '1st Bene's bank'?




16. Which of the following statements is correct when an assignment of proceeds has been effected
under a documentary credit issued in accordance with UCP 600?
A The assignee must present complying documents to receive payment.
B The assignee will receive payment of the proceeds directly from the applicant.
C The value of the documentary credit is reduced by the amount of the assignment.
D The beneficiary has assigned its rights to the stated amount of proceeds to the assignee.

----> Is there any difference between 'assignment of proceeds' vs 'assignment of right to proceeds'. I think I am confused by the term 'assignment of rights to perform' because it is emphasized in the book that 'assignment of rights' is different from 'assignment of proceeds, not rights'


On 03 January XXXX an irrevocable documentary credit for USD 500,000.00 is confirmed. On 17
January XXXX the confirming bank receives an amendment cancelling the documentary credit
which it advises to the beneficiary. As at 18 January XXXX, what is the liability of both banks?
A Issuing and confirming bank – USD 0.00.
B Issuing and confirming bank USD 500,000.00.
C Issuing bank – USD 0.00 Confirming bank – USD 500,000.00.
D Issuing bank – USD 500,000.00 Confirming bank – USD 0.00.D 3 and 4 only.

----> Answer is (B). Is it because (1) question did not say Issuing Bank, Confirming Bank & Beneficiary agree to the amendment & (2) qn did not say Confirming Bank had extended confirmation, so by default, we say Confirming Bank had not extended confirmation?

If otherwise, (1) Issuing Bank, Confirming Bank & Bene had agreed --> then ans would be (D)?

[Mahmoudtawalbeh]

Dear,

regarding Question number One:
i think the correct answer is:
B Allow the second beneficiary to obtain payment for complying documents.

regarding answer D: the supplier is the Second Beneficiary and the Intermediary is the First Beneficiary and since Documentary Credit gives both sides the best possible secured payment method but from the Applicants side (i.e the First Beneficiary) to the Beneficiary (i.e. the Second Beneficiary) thus why i think the sense is in arrangement in Option D , in case of Transferable Documentary Credits the Intermediary (First Beneficiary) has a less things to lose since he is working as intermediary between the second beneficiary and the original LC Applicant , so , to make this sentence correct it should be like this:
D Permit the intermediary trader to provide the supplier with the security of a documentary
credit..

Question number 16:
D The beneficiary has assigned its rights to the stated amount of proceeds to the assignee. is the correct answer.

Regarding your question , i think that the right of perform under a documentary credit is not given to the assignee only its given the right to obtain payment under the LC for the amount of the A.O.P. so, the UCP and the CDCS book are strictly assuring that no right to perform under the documentary credit is given to the assignee.

Question number 3:
answer is that the liability of both Issuing Bank and the Confirming Bank still for USD500,000.00 SINCE THIS AMENDMENT NEEDS ACCEPTANCE OF THE BENEFICIARY IN ORDER TO CANCEL THE DOCUMENTARY CREDIT AND ELIMINATE THE TOTAL LIABILITIES OF ALL BANKS UNDER THIS CASE.

[IJTUDU]

Agreed with Mahmoudtawalbeh.

[vuhoang2012]

Hi all,

Have the following questions need your help!

1.The Master LC for USD100,000 waas transfered in the following manner by firdt Benficiary X
-Amount Transferred by X to A: USD25000
-Amount Transferred by X to B: USD25000
-Amount Transferred by X to C: USD25000
-Amount Transferred by X to D: USD25000

1. A dies of ill heath and his share is transfered back to X
2. X's contract with B is repudiated for part of goods and B transfers USD12500 to X
3. C transfers part of his LC value of USD10000 to D
4.D transfers part of his LC value to E
Out of above which of the following consitutes a orohibited transfer?
A. 1& 2 only
B .3 & 4 only
C. 2,3,4 only
D. 1,3,4 only

[RAKESHCH]

3 & 4

[kisazi]

I think B. Because in 3&4, 2nd Ben doesn't transfer to 1st Ben.

[Uppendhar]

On 03 January XXXX an irrevocable documentary credit for USD 500,000.00 is confirmed. On 17
January XXXX the confirming bank receives an amendment cancelling the documentary credit
which it advises to the beneficiary. As at 18 January XXXX, what is the liability of both banks?
A Issuing and confirming bank – USD 0.00.
B Issuing and confirming bank USD 500,000.00.
C Issuing bank – USD 0.00 Confirming bank – USD 500,000.00.
D Issuing bank – USD 500,000.00 Confirming bank – USD 0.00.D 3 and 4 only.

----> Answer is (B). Is it because beneficiary didnot confirm the acceptance of amendment of cancellation

[shafi865]

My choices are as folows
12) B
16) D
Last) B

[shafi865]

Hi all,

Have the following questions need your help!

12. A transferable credit can do which of the following?
A Protect the applicant from the risks of loss and error.
B Allow the second beneficiary to obtain payment for complying documents.
C Restrict the right of the second beneficiary to claim payment directly from the nominated
bank.
D Permit the supplier to provide the intermediary trader with the security of a documentary
credit.

----> How is Option D wrong? Is it that 'supplier' shld be changed to '1st Bene's bank'?




16. Which of the following statements is correct when an assignment of proceeds has been effected
under a documentary credit issued in accordance with UCP 600?
A The assignee must present complying documents to receive payment.
B The assignee will receive payment of the proceeds directly from the applicant.
C The value of the documentary credit is reduced by the amount of the assignment.
D The beneficiary has assigned its rights to the stated amount of proceeds to the assignee.

----> Is there any difference between 'assignment of proceeds' vs 'assignment of right to proceeds'. I think I am confused by the term 'assignment of rights to perform' because it is emphasized in the book that 'assignment of rights' is different from 'assignment of proceeds, not rights'


On 03 January XXXX an irrevocable documentary credit for USD 500,000.00 is confirmed. On 17
January XXXX the confirming bank receives an amendment cancelling the documentary credit
which it advises to the beneficiary. As at 18 January XXXX, what is the liability of both banks?
A Issuing and confirming bank – USD 0.00.
B Issuing and confirming bank USD 500,000.00.
C Issuing bank – USD 0.00 Confirming bank – USD 500,000.00.
D Issuing bank – USD 500,000.00 Confirming bank – USD 0.00.D 3 and 4 only.

----> Answer is (B). Is it because (1) question did not say Issuing Bank, Confirming Bank & Beneficiary agree to the amendment & (2) qn did not say Confirming Bank had extended confirmation, so by default, we say Confirming Bank had not extended confirmation?

If otherwise, (1) Issuing Bank, Confirming Bank & Bene had agreed --> then ans would be (D)?

My choices are as folows
12) B
16) D
Last) B

[anwarikooo]

3 & 4

Transferable lc cant be transferred more than once exept to the issuimg bank(transferring bank) . Its like he wont be able to transfer so he. Returns the lc to the 2nd issuing bank