The multiple choice for L/C 1
Posted: Sun Jul 14, 2019 3:41 pm
Dear Experts,
Pls give your answer and short explaination. Thank you so much!!!
1 In a L/C calling for a Bill of Lading on CFR basis, which of the following is acceptable
A. Shipped on board with freight pre-payable
B. Shipped on board with freight to be paid
C. Shipped on board with freight prepaid and destination charges collect
D. Received for shipment with freight prepaid and destination charges to pay
2.A standby subject to ISP 98 is issued with the following clauses:
Beneficiary can claim under the standby by presenting a statement of default certifying that applicant
has not paid invoices within 60 days after shipment date including invoice no. 123
The beneficiary presents a drawing with the following documents:
- Beneficiary’s statement of default which complies with the standby
- Copy of unpaid invoice no. 234
As an issuer of the standby, which of the following is your BEST course of action?
A. Refuse the presentation as contract reference is different from the standby
B. Pay the beneficiary
C. Ask beneficiary to change contract reference in the invoice
D. Obtain applicant’s approval for payment
3.Speed Airways has entered into a contract with your client Green Aircraft Manufacturing Co. to lease an
airplane for 10 years. The lease payment is due every six months and will be paid directly by Speed
Airways through their bank. Which of the following credits best serves your client’s interest and protects
them against the credit risk of Speed Airways?
A. Revolving credit Which of the following statements BEST describes the purpose of a packing list?
I. To indicate to the applicant and carrier the gross and net weight of the goods
II. To indicate to the clearing agent the description of goods in each package
III. To enable customs authorities to conduct spot checks on the content of packages
IV. To satisfy health authorities in the country of import
Options:
A. I and II
B. II and III
C. I and IV
D. I and III
4.Extract from a LC:
Shipment : From any Indian Airport to Chinese Airport
Documents: Full set of airway bills consigned to order of ABC Ltd evidencing the flight number
Transshipments: Not allowed
Which of the following documents are ACCEPTABLE under this LC?
I. Full set airway bill showing shipment from Chennai to Chinese airport, consigned to ABC Ltd on
Flight No. 172
II. House airway bill showing shipment from Chennai to Shanghai, consigned to ABC Ltd on Flight
No. 172
III. Airway bill showing shipment from Chennai to Shanghai, consigned to order of ABC Ltd stating
Flight No. 172 in “Requested Flight” box
IV. Airway bill marked “Original for shipper” showing shipment from Chennai to Beijing, consigned
to ABC Ltd on Flight No. 171 from MAA to SIN and Flight No. 173 from SIN to PEK (i.e. using IATA
codes)
Options:
A. I and II
B. II and III
C. IV only
D. I and IV
5.Your client has entered into a contract to purchase machine tools from a producer in a neighboring
country. Since the production is a new venture, the producer wants an advance payment to procure raw
material to manufacture the tools. Which letter of credit will facilitate this transaction?
A. Red clause letter of credit
B. Revolving letter of credit
C. Evergreen letter of credit
D. Installment letter of credit
6. As a nominated bank, you wish to negotiate credit compliant documents from a beneficiary under a
sight credit available by negotiation. Which of the following constitutes negotiation?
I. Make immediate payment to the beneficiary and send documents to the issuing bank
II. Make payment to the beneficiary after receipt of funds from the issuing bank
III. Agree to pay the beneficiary after 10 days (you expect to be paid after 14 days)
TF Q BANK Page 5
IV. Seek permission from issuing bank t negotiate the documents
Options:
A. IV only
B. II and III
C. III only
D. I and III
7. Speed Airways has entered into a contract with your client Green Aircraft Manufacturing Co. to lease an
airplane for 10 years. The lease payment is due every six months and will be paid directly by Speed
Airways through their bank. Which of the following credits best serves your client’s interest and protects
them against the credit risk of Speed Airways?
A. Revolving credit
B. Installment credit
C. Green clause letter of credit
D. Evergreen standby letter of credit
8. A credit issued by Bank A, available with Bank B by Payment included the expiry date as 04 February XX.
The beneficiary couriered documents to Bank B on 31 January XX. However on account of a general
strike, Bank B was unable to receive and process documents. The beneficiary re-routed the documents
directly to Bank A which was received by them on 5th February XX. Which of the following statements
reflects Bank A’s position?
A. Bank A must pay the beneficiary if documents are credit compliant
B. Bank A is not obliged to pay, since the documents were presented after expiry date
C. Bank A is not obliged to pay since the documents were not presented through the nominated bank
D. Bank A must request the beneficiary to re-present documents to Bank B for payment
9. What purpose does an inspection certificate serve?
A. Ensures goods are of a certain quality and insured?
B. Ensures there is no over invoicing and goods are adequately insured
C. Ensures quality of goods is as per globally acceptable standards
D. Ensures that the goods are of certain quality as requested by the applicant
10. Your client presents documents under a LC which states that shipment is to be effected in the beginning
of February. Which of the following documents will be ACCEPTABLE?
A. Marine B/L showing date of receipt of goods as 07 February XX
B. A railway bill bearing a reception stamp dated 08 February XX
C. An airway bill evidencing flight date as 15 February XX
D. All of the above
11. Which of the following statement regarding forfaiting are TRUE?
TF Q BANK Page 6
I. It is an arrangement between by means of which the seller receives payment for export
receivables from the lender without recourse
II. It is a device used for long term financing
III. Rights to payment under letters of credit are accepted as security
IV. It is a guarantee given by the lender to pay the seller in case the buyer defaults
Options:
A. I and II
B. I and III
C. I, II and III
D. II, III and IV
12.Bank I (the issuing bank) received documents on 11 March XX (Tuesday) and found the documents to be
discrepant. Which of the following notices sent by Bank I is / are valid? (Saturdays and Sundays are bank
holidays)
A. MT 799 sent on 14 March XX “We received your documents presented under our LC. However
we refuse to pay as the documents are discrepant. Meanwhile we are holding the documents at
your disposal
B. MT 799 sent on 18 March XX “We refuse your presentation as the documents contain the
following discrepancies: Late shipment, Partial shipment. We are returning the documents to
you by courier
C. MT 799 sent on 13 March XX “We have found that the documents contain discrepancy late
shipment. We will effect payment when documents are accepted by the applicant”
D. MT 799 sent on 19 March XX “We refuse payment as the documents contain the discrepancy
late shipment. We are holding documents at your risk and disposal
13.Extract from a LC:
Beneficiary: ABC Co, Taiwan
Documents required: 1. Certificate of Origin issued by the manufacturer
2. Inspection Certificate issued by a competent authority in the exporting country
The beneficiary presented the following documents:
I. Certificate of origin issued by a Chamber of Commerce mentioning the name of the
manufacturer
II. Inspection Certificate issued by XYZ Co in China
III. Invoice showing manufacturer as XYZ Co, China
Options:
A. Documents I and II are not acceptable
B. Documents I and II are acceptable
C. Document I is acceptable but II is not
D. Document II is acceptable but I is not
14.If a LC requires a presentation of export license, which of the following statements are TRUE?
A. It may be issued by the export licensing authority in the country of export
B. It may be issued by the beneficiary and stamped by export licensing authority
C. It should include certification by export licensing authority allowing the export of goods
D. All of the above
15. Which of the following parties is NOT AUTHORISED to sign a multimodal transport document?
A. Carrier
B. Master
TF Q BANK Page 8
C. Multimodal Transport Operator
D. Agent of the Master
16.In which of the following trades is a letter of indemnity commonly seen?
A. Normal commercial transactions
B. Trade manufactured goods
C. Commodity Trade
D. Sale of capital machinery
17. As a nominated bank, which of these should be followed while handling pending dishonored
documents?
I. The documents should be held at the disposal of the applicant
II. The documents should be securely stored
III. The presenter needs to be informed at regular intervals
IV. The presenter need not be informed at regular intervals
Options:
A. I and II
B. I and III
C. II and III
D. II and IV
18. Which of the following statements are TRUE with respect to an evergreen letter of credit?
I. They should be issued only for applicants of undoubted financial and dependable undertaking
II. They should only be issued for beneficiaries of undoubted financial and dependable undertaking
III. The liability remains outstanding for a long period
IV. An evergreen letter of credit is always a standby letter of credit
Options:
A. I and II
B. I and III
C. II and IV
D. I, III and IV
19.The advising bank which does not wish to act on the nomination or confirm the LC should expressly
indicate in its advice enclosing the credit that:
i. It undertakes no liability and gives no undertaking in respect of the credit
ii. It will merely forward documents presented to them to the issuing bank if so required by the
beneficiary
iii. The LC has not been authenticated, in cases where it is unable to establish the authenticity of
the LC
iv. It has established the authenticity of the credit
Options:
A. I, II and III
B. II, III and IV
C. I, III and IV
D. I, II and IV
20. Which of the following scenarios will NOT be considered as partial shipment by banks?
I. LC requires presentation of a Truck Receipt covering shipment from Chennai / Tirupur to
Kolkatta. Documents presented include one truck way bill showing shipment from Tirupur to
Kolkatta on truck no. TN58 5628 and another truck bill showing shipment from Chennai to
Kolkatta on truck no. TN58 5628
II. LC requires presentation of a charter party B/L covering shipment from any Indian port to
Singapore. Documents presented include two sets of charter party B/L showing ports of loading
as Chennai and Tuticorin with the same vessel name, voyage number and port of discharge as
Singapore
III. LC requires presentation of a railway receipt covering shipment from Chennai / Tirupur to
Kolkata. Documents presented include two sets of rail way bills. One covers shipment from
Chennai to Kolkatta on Train No. 6382 Wagon No. 12 and the other covers shipment from
Tirupur to Kolkata on Train No. 6216 Wagon No. 3
IV. LC requires presentation of a courier receipt covering shipment from Chennai to Kolkatta.
Documents presented include two sets of courier receipts issued by two different companies,
both stamped at Chennai on 15th February showing goods dispatched from Chennai to Kolkatta
Options:
A. I and II
B. II and III
C. III and IV
D. I and IV
21. An issuing bank notices that the B/L is not signed as per UCP and seeks a waiver from the applicant. The
applicant waives the discrepancy. The issuing bank then notices that the applicant does not have
sufficient funds in their account to settle the drawing. Which of the following is TRUE?
A. The issuing bank is obliged to pay since the applicant has waived the discrepancies
B. The issuing bank can send a refusal for the documents
C. The issuing bank is obliged to pay if the nominated bank has negotiated the documents and paid the
beneficiary
D. The issuing bank should pay only up to the amount of funds that is available in applicant’s account
22. Which of the following invoices is NOT ACCEPTABLE under an LC which calls for an “Original Invoice”?
A. Photocopy of invoice marked “original”
B. Carbon copy of tax invoice originally signed
C. Original signed proforma invoice
D. Unsigned customs invoice issued on original letter head of the beneficiary
23. Which of the following statements is FALSE regarding Incoterms?
A. The seller is responsible for unloading from the arriving means of transport in a DAT Contract
B. The buyer is responsible for unloading from the arriving means of transport in a DAP Contract
C. The buyer is responsible for unloading from the arriving means of transport in a CIF Contract
D. The seller is responsible for unloading from the arriving means of transport in a DDP Contract
What is the effect of an evergreen clause in a documentary credit?
A. It allows for payment to be made against production of a warehouse receipt
B. It allows beneficiary to draw under the LC to provide insurance of goods in certain trades
C. It makes the LC inoperative
D. It allows the LC validity to be automatically extended
24. If an exporter is willing to send the shipping documents directly to the buyer, but wishes to retain some
guarantee of payment if the buyer fails to pay on due date, which of the following BEST suits the
exporter’s needs?
A. Transferable Credit
B. Revolving Credit
C. Standby Credit
D. Evergreen Credit
25. A credit issued in favour of the Ministry of Agriculture, Government of India requires presentation of a
Phytosanitary Certificate issued by an official authority and an Inspection Certificate. Which of the
following statements are TRUE?
I. The Inspection Certificate must be issued by a third party
II. The Phytosanitary Certificate may be issued by Ministry of Agriculture, Government of India
III. The Inspection Certificate may be issued by Ministry of Agriculture, Government of India
IV. The Phytosanitary Certificate must be issued by a third party
Options:
A. I and II
B. II and III
C. I and IV
D. III and IV
26. The beneficiary (who is a trading intermediary) wishes to make payment to the actual supplier of the
goods. Which of the following credits could the beneficiary’s bank issue to meet the beneficiary’s need?
A. Transferable Credit
B. Back to Back Credit
C. Standby Credit
D. Revolving Credit
27.Which of the following is not a risk for a bank which is issuing a shipping guarantee?
A. The bank will have to indemnify the carrier in respect of any liability or loss sustained by the
delivering the goods as requested
B. The bank will have to make the payment even if it receives discrepant documents under the credit
C. The bank will not be able to ascertain its total liability in the absence of shipping documents
D. The bank takes on the credit risk of the shipping company
28 Which of the following Incoterms is appropriate when the seller is to bear all the risks and costs
including taxes and other duties at the quay at a named port of destination?
A. CIF
B. DDP
C. DAT
D. DAP
29.Which of the following actions should a nominated bank perform?
I. It should add its confirmation to the credit
II. It should advise the beneficiary of its agreement to act as a nominated bank
III. In the event it has agreed to act as a nominated bank, it should process discrepant documents in
terms of Article 16 of UCP 600
IV. It should discuss with the beneficiary the possibility of discrepancies arising and how they may
be resolved prior to formal presentation of documents
Options:
A. I and II
B. II and III
C. I, II and III
D. II, III and IV
30 A beneficiary is bound by the terms of an amendment at the time:
I. The amendment is issued by the issuing bank
II. The amendment is advised by the advising bank
III. The beneficiary presents documents which comply with the terms and conditions of the credit
and the amendment
IV. The beneficiary duly notifies their acceptance of the amendment
Options:
A. III only
B. III and IV
C. I, III and IV
D. I and IV
31. Bank I issued a credit available with Bank N by negotiation. Bank I receives documents from Bank B
stating that documents were compliant and that they have negotiated documents. Which of the
following statements BEST describe the options available to Bank I?
A. Examine documents. If they are compliant, pay Bank B
B. Examine documents. If they are compliant pay Bank N
C. Return documents to Bank B as Bank B is not authorized to negotiate
D. Send documents to Bank N for negotiation
Pls give your answer and short explaination. Thank you so much!!!
1 In a L/C calling for a Bill of Lading on CFR basis, which of the following is acceptable
A. Shipped on board with freight pre-payable
B. Shipped on board with freight to be paid
C. Shipped on board with freight prepaid and destination charges collect
D. Received for shipment with freight prepaid and destination charges to pay
2.A standby subject to ISP 98 is issued with the following clauses:
Beneficiary can claim under the standby by presenting a statement of default certifying that applicant
has not paid invoices within 60 days after shipment date including invoice no. 123
The beneficiary presents a drawing with the following documents:
- Beneficiary’s statement of default which complies with the standby
- Copy of unpaid invoice no. 234
As an issuer of the standby, which of the following is your BEST course of action?
A. Refuse the presentation as contract reference is different from the standby
B. Pay the beneficiary
C. Ask beneficiary to change contract reference in the invoice
D. Obtain applicant’s approval for payment
3.Speed Airways has entered into a contract with your client Green Aircraft Manufacturing Co. to lease an
airplane for 10 years. The lease payment is due every six months and will be paid directly by Speed
Airways through their bank. Which of the following credits best serves your client’s interest and protects
them against the credit risk of Speed Airways?
A. Revolving credit Which of the following statements BEST describes the purpose of a packing list?
I. To indicate to the applicant and carrier the gross and net weight of the goods
II. To indicate to the clearing agent the description of goods in each package
III. To enable customs authorities to conduct spot checks on the content of packages
IV. To satisfy health authorities in the country of import
Options:
A. I and II
B. II and III
C. I and IV
D. I and III
4.Extract from a LC:
Shipment : From any Indian Airport to Chinese Airport
Documents: Full set of airway bills consigned to order of ABC Ltd evidencing the flight number
Transshipments: Not allowed
Which of the following documents are ACCEPTABLE under this LC?
I. Full set airway bill showing shipment from Chennai to Chinese airport, consigned to ABC Ltd on
Flight No. 172
II. House airway bill showing shipment from Chennai to Shanghai, consigned to ABC Ltd on Flight
No. 172
III. Airway bill showing shipment from Chennai to Shanghai, consigned to order of ABC Ltd stating
Flight No. 172 in “Requested Flight” box
IV. Airway bill marked “Original for shipper” showing shipment from Chennai to Beijing, consigned
to ABC Ltd on Flight No. 171 from MAA to SIN and Flight No. 173 from SIN to PEK (i.e. using IATA
codes)
Options:
A. I and II
B. II and III
C. IV only
D. I and IV
5.Your client has entered into a contract to purchase machine tools from a producer in a neighboring
country. Since the production is a new venture, the producer wants an advance payment to procure raw
material to manufacture the tools. Which letter of credit will facilitate this transaction?
A. Red clause letter of credit
B. Revolving letter of credit
C. Evergreen letter of credit
D. Installment letter of credit
6. As a nominated bank, you wish to negotiate credit compliant documents from a beneficiary under a
sight credit available by negotiation. Which of the following constitutes negotiation?
I. Make immediate payment to the beneficiary and send documents to the issuing bank
II. Make payment to the beneficiary after receipt of funds from the issuing bank
III. Agree to pay the beneficiary after 10 days (you expect to be paid after 14 days)
TF Q BANK Page 5
IV. Seek permission from issuing bank t negotiate the documents
Options:
A. IV only
B. II and III
C. III only
D. I and III
7. Speed Airways has entered into a contract with your client Green Aircraft Manufacturing Co. to lease an
airplane for 10 years. The lease payment is due every six months and will be paid directly by Speed
Airways through their bank. Which of the following credits best serves your client’s interest and protects
them against the credit risk of Speed Airways?
A. Revolving credit
B. Installment credit
C. Green clause letter of credit
D. Evergreen standby letter of credit
8. A credit issued by Bank A, available with Bank B by Payment included the expiry date as 04 February XX.
The beneficiary couriered documents to Bank B on 31 January XX. However on account of a general
strike, Bank B was unable to receive and process documents. The beneficiary re-routed the documents
directly to Bank A which was received by them on 5th February XX. Which of the following statements
reflects Bank A’s position?
A. Bank A must pay the beneficiary if documents are credit compliant
B. Bank A is not obliged to pay, since the documents were presented after expiry date
C. Bank A is not obliged to pay since the documents were not presented through the nominated bank
D. Bank A must request the beneficiary to re-present documents to Bank B for payment
9. What purpose does an inspection certificate serve?
A. Ensures goods are of a certain quality and insured?
B. Ensures there is no over invoicing and goods are adequately insured
C. Ensures quality of goods is as per globally acceptable standards
D. Ensures that the goods are of certain quality as requested by the applicant
10. Your client presents documents under a LC which states that shipment is to be effected in the beginning
of February. Which of the following documents will be ACCEPTABLE?
A. Marine B/L showing date of receipt of goods as 07 February XX
B. A railway bill bearing a reception stamp dated 08 February XX
C. An airway bill evidencing flight date as 15 February XX
D. All of the above
11. Which of the following statement regarding forfaiting are TRUE?
TF Q BANK Page 6
I. It is an arrangement between by means of which the seller receives payment for export
receivables from the lender without recourse
II. It is a device used for long term financing
III. Rights to payment under letters of credit are accepted as security
IV. It is a guarantee given by the lender to pay the seller in case the buyer defaults
Options:
A. I and II
B. I and III
C. I, II and III
D. II, III and IV
12.Bank I (the issuing bank) received documents on 11 March XX (Tuesday) and found the documents to be
discrepant. Which of the following notices sent by Bank I is / are valid? (Saturdays and Sundays are bank
holidays)
A. MT 799 sent on 14 March XX “We received your documents presented under our LC. However
we refuse to pay as the documents are discrepant. Meanwhile we are holding the documents at
your disposal
B. MT 799 sent on 18 March XX “We refuse your presentation as the documents contain the
following discrepancies: Late shipment, Partial shipment. We are returning the documents to
you by courier
C. MT 799 sent on 13 March XX “We have found that the documents contain discrepancy late
shipment. We will effect payment when documents are accepted by the applicant”
D. MT 799 sent on 19 March XX “We refuse payment as the documents contain the discrepancy
late shipment. We are holding documents at your risk and disposal
13.Extract from a LC:
Beneficiary: ABC Co, Taiwan
Documents required: 1. Certificate of Origin issued by the manufacturer
2. Inspection Certificate issued by a competent authority in the exporting country
The beneficiary presented the following documents:
I. Certificate of origin issued by a Chamber of Commerce mentioning the name of the
manufacturer
II. Inspection Certificate issued by XYZ Co in China
III. Invoice showing manufacturer as XYZ Co, China
Options:
A. Documents I and II are not acceptable
B. Documents I and II are acceptable
C. Document I is acceptable but II is not
D. Document II is acceptable but I is not
14.If a LC requires a presentation of export license, which of the following statements are TRUE?
A. It may be issued by the export licensing authority in the country of export
B. It may be issued by the beneficiary and stamped by export licensing authority
C. It should include certification by export licensing authority allowing the export of goods
D. All of the above
15. Which of the following parties is NOT AUTHORISED to sign a multimodal transport document?
A. Carrier
B. Master
TF Q BANK Page 8
C. Multimodal Transport Operator
D. Agent of the Master
16.In which of the following trades is a letter of indemnity commonly seen?
A. Normal commercial transactions
B. Trade manufactured goods
C. Commodity Trade
D. Sale of capital machinery
17. As a nominated bank, which of these should be followed while handling pending dishonored
documents?
I. The documents should be held at the disposal of the applicant
II. The documents should be securely stored
III. The presenter needs to be informed at regular intervals
IV. The presenter need not be informed at regular intervals
Options:
A. I and II
B. I and III
C. II and III
D. II and IV
18. Which of the following statements are TRUE with respect to an evergreen letter of credit?
I. They should be issued only for applicants of undoubted financial and dependable undertaking
II. They should only be issued for beneficiaries of undoubted financial and dependable undertaking
III. The liability remains outstanding for a long period
IV. An evergreen letter of credit is always a standby letter of credit
Options:
A. I and II
B. I and III
C. II and IV
D. I, III and IV
19.The advising bank which does not wish to act on the nomination or confirm the LC should expressly
indicate in its advice enclosing the credit that:
i. It undertakes no liability and gives no undertaking in respect of the credit
ii. It will merely forward documents presented to them to the issuing bank if so required by the
beneficiary
iii. The LC has not been authenticated, in cases where it is unable to establish the authenticity of
the LC
iv. It has established the authenticity of the credit
Options:
A. I, II and III
B. II, III and IV
C. I, III and IV
D. I, II and IV
20. Which of the following scenarios will NOT be considered as partial shipment by banks?
I. LC requires presentation of a Truck Receipt covering shipment from Chennai / Tirupur to
Kolkatta. Documents presented include one truck way bill showing shipment from Tirupur to
Kolkatta on truck no. TN58 5628 and another truck bill showing shipment from Chennai to
Kolkatta on truck no. TN58 5628
II. LC requires presentation of a charter party B/L covering shipment from any Indian port to
Singapore. Documents presented include two sets of charter party B/L showing ports of loading
as Chennai and Tuticorin with the same vessel name, voyage number and port of discharge as
Singapore
III. LC requires presentation of a railway receipt covering shipment from Chennai / Tirupur to
Kolkata. Documents presented include two sets of rail way bills. One covers shipment from
Chennai to Kolkatta on Train No. 6382 Wagon No. 12 and the other covers shipment from
Tirupur to Kolkata on Train No. 6216 Wagon No. 3
IV. LC requires presentation of a courier receipt covering shipment from Chennai to Kolkatta.
Documents presented include two sets of courier receipts issued by two different companies,
both stamped at Chennai on 15th February showing goods dispatched from Chennai to Kolkatta
Options:
A. I and II
B. II and III
C. III and IV
D. I and IV
21. An issuing bank notices that the B/L is not signed as per UCP and seeks a waiver from the applicant. The
applicant waives the discrepancy. The issuing bank then notices that the applicant does not have
sufficient funds in their account to settle the drawing. Which of the following is TRUE?
A. The issuing bank is obliged to pay since the applicant has waived the discrepancies
B. The issuing bank can send a refusal for the documents
C. The issuing bank is obliged to pay if the nominated bank has negotiated the documents and paid the
beneficiary
D. The issuing bank should pay only up to the amount of funds that is available in applicant’s account
22. Which of the following invoices is NOT ACCEPTABLE under an LC which calls for an “Original Invoice”?
A. Photocopy of invoice marked “original”
B. Carbon copy of tax invoice originally signed
C. Original signed proforma invoice
D. Unsigned customs invoice issued on original letter head of the beneficiary
23. Which of the following statements is FALSE regarding Incoterms?
A. The seller is responsible for unloading from the arriving means of transport in a DAT Contract
B. The buyer is responsible for unloading from the arriving means of transport in a DAP Contract
C. The buyer is responsible for unloading from the arriving means of transport in a CIF Contract
D. The seller is responsible for unloading from the arriving means of transport in a DDP Contract
What is the effect of an evergreen clause in a documentary credit?
A. It allows for payment to be made against production of a warehouse receipt
B. It allows beneficiary to draw under the LC to provide insurance of goods in certain trades
C. It makes the LC inoperative
D. It allows the LC validity to be automatically extended
24. If an exporter is willing to send the shipping documents directly to the buyer, but wishes to retain some
guarantee of payment if the buyer fails to pay on due date, which of the following BEST suits the
exporter’s needs?
A. Transferable Credit
B. Revolving Credit
C. Standby Credit
D. Evergreen Credit
25. A credit issued in favour of the Ministry of Agriculture, Government of India requires presentation of a
Phytosanitary Certificate issued by an official authority and an Inspection Certificate. Which of the
following statements are TRUE?
I. The Inspection Certificate must be issued by a third party
II. The Phytosanitary Certificate may be issued by Ministry of Agriculture, Government of India
III. The Inspection Certificate may be issued by Ministry of Agriculture, Government of India
IV. The Phytosanitary Certificate must be issued by a third party
Options:
A. I and II
B. II and III
C. I and IV
D. III and IV
26. The beneficiary (who is a trading intermediary) wishes to make payment to the actual supplier of the
goods. Which of the following credits could the beneficiary’s bank issue to meet the beneficiary’s need?
A. Transferable Credit
B. Back to Back Credit
C. Standby Credit
D. Revolving Credit
27.Which of the following is not a risk for a bank which is issuing a shipping guarantee?
A. The bank will have to indemnify the carrier in respect of any liability or loss sustained by the
delivering the goods as requested
B. The bank will have to make the payment even if it receives discrepant documents under the credit
C. The bank will not be able to ascertain its total liability in the absence of shipping documents
D. The bank takes on the credit risk of the shipping company
28 Which of the following Incoterms is appropriate when the seller is to bear all the risks and costs
including taxes and other duties at the quay at a named port of destination?
A. CIF
B. DDP
C. DAT
D. DAP
29.Which of the following actions should a nominated bank perform?
I. It should add its confirmation to the credit
II. It should advise the beneficiary of its agreement to act as a nominated bank
III. In the event it has agreed to act as a nominated bank, it should process discrepant documents in
terms of Article 16 of UCP 600
IV. It should discuss with the beneficiary the possibility of discrepancies arising and how they may
be resolved prior to formal presentation of documents
Options:
A. I and II
B. II and III
C. I, II and III
D. II, III and IV
30 A beneficiary is bound by the terms of an amendment at the time:
I. The amendment is issued by the issuing bank
II. The amendment is advised by the advising bank
III. The beneficiary presents documents which comply with the terms and conditions of the credit
and the amendment
IV. The beneficiary duly notifies their acceptance of the amendment
Options:
A. III only
B. III and IV
C. I, III and IV
D. I and IV
31. Bank I issued a credit available with Bank N by negotiation. Bank I receives documents from Bank B
stating that documents were compliant and that they have negotiated documents. Which of the
following statements BEST describe the options available to Bank I?
A. Examine documents. If they are compliant, pay Bank B
B. Examine documents. If they are compliant pay Bank N
C. Return documents to Bank B as Bank B is not authorized to negotiate
D. Send documents to Bank N for negotiation