http://inco-terms.blogspot.com/

1. L/C is an undertaking of making payment given by -

(A) Importer to Beneficiary

(B) Issuing Bank to Negotiating Bank

(D) Consignee to Consignor

2. Generally which bank makes initial payment to the exporter after receiving the documents?

(A) The Reimbursing Bank

(B) The Advising Bank

(D) None of these

3. Which of the following belongs to pre-shipment credit?

(A) FBP

(B) PAD

(D) Back to Back L/C

4. Bill of Lading is -

(A) a negotiable instrument

(B) a non-negotiable instrument

(C) quasi-negotiable instrument

(D) None of these

5. Incoterm indicate who will bear -

(A) Cost of Carriage

(B) Risk of Carriage

(C) Both (a) and (b)

(D) None of these

6. In a letter of credit transaction as per UCPDC, banks deal in -

A) Documents and not in goods

B) Goods and not in documents

C) Both documents and goods

D) None of these

7. Acceptance of drawee is required in case of -

A) bill payable after sight;

B) bill payable on demand;

C) promissory note payable on demand.

D) None of these

8. Protest is necessary in case of dishonour of -

A) Foreign promissory note;

B) Foreign Bill of Exchange

C) Inland Bill of Exchange

D) None of these

9. A bill of Exchange drawn in Delhi and payable in London is an example of -

A) Inland Bill

B) Foreign Bill

C) Clean Bill

D) None of these

10. A X of Mumbai draws a bill of exchange on Y of Delhi payable at London. It is an example of -

A) Inland Bill

B) Foreign Bill

C) Accommodation Bill

D) None of these

11. If a bill of exchange dated January 31, 1983 is payable one month after date, the due date of the instrument will be -

A) February 28, 1983

B) March 1, 1983

C) March 2, 1983

D) March 3, 1983

12. A non-trading joint stock company can draw or accept negotiable instrument if it has been given such power of by -

A) its memorandum of association; (it is alright)

B) its articles of association;

C) the Companies Act.

D) None of these

13. Presentment means placing before the drawee a negotiable instrument for -

A) acceptance;

B) payment;

C) sight, acceptance or payment.

D) None of these

14. A drawee is to be given for deliberations at least a time of -

A) 24 hours;

B) 48 hours;

C) 72 hours

D) None of these

15. Presentment for acceptance is required in case of -

A) every bill of exchange;

B) every promissory note;

C) every bill of exchange payable after sight;

D) None of these

16. A bill should be presented for acceptance in case of insolvency of a drawee to -

A) official receiver;

B) drawee in case of need;

C) acceptor for honour

D) None of these

17. In a letter of credit – backed mechanism, the Advising Bank’s responsibility is to -

A. inform issuing Bank as to whom to issue the letter of credit;

B. advise the buyer the despatch of documents by the seller;

C. inform the beneficiary/ seller about the letter of credit;

D. None of the above

18. In terms of UCPDC-600, in absence of any indication in the Letter of Credit, it will be treated as -

A. Revocable Letter of Credit;

B. Irrevocable Letter of Credit;

C. Not a Letter of Credit;

D. Cancelled Agreement.

19. When in a letter of credit the confirming bank confirms the credit, it -

A. does not take any liability;

B. undertakes to make timely delivery of the documents;

C. undertakes on its part the liability under the L/C;

D. None of the above

20. A bill of lading is -

A. a negotiable instrument;

B. quasi – negotiable instrument;

C. a non – negotiable instrument;

D. non – transferable instrument.

21. Is Bangladesh Bank a Schedule Bank?

(A) No, it is the Central Bank of Bangladesh.

(B) Yes, but exempted from keeping Liquidity like commercial banks by the Bank Companies Act-1991

22. A Bill of Exchange is payable:

(A) Only on Demand or at a fixed time.

(B) On Demand or at a fixed or determinable future time.

(C) Only at a fixed time or determinable future time.

23. Validity of LCA form for opening of L/C-

a.	120 days	b.	150 days
c.	100 days	d.	90 days

	24. Who issues LC Authorization Form

	AD		a.		BB
	CCI & E		b.		None of the above
25. How many incoterms are in the present revision?

12		a.		11
9		b.		13

26. What is the responsibility of an advising Bank?

To issue LC

To confirm the authenticity of a LC

To make payment to the exporter

To give a payment undertaking

27. Which is not a currency as per FERA 1947?

Bills of Exchange

Bill of Lading

Drafts

28. Which kind of LC is generally opened under Export LC?

SLC

BBLC

ULC

Stand by LC

29.

AD Branch may allow Interest on the balances held in FC Accounts.

True

False

30. Bill of entry is the proof of :

Import

Release of goods

Custom clearance

Payment complied with value of goods.

31. What is the LC value for which credit report is mandatory for opening of LC against indent?

10 Lac and above

16 Lac and above

15 Lac and above

14 Lac and above

32. Which of the following is not among the main/core parties of LC-

issuing bank

advising bank

beneficiary

confirming bank

33. As per CFR term, who covers the cost of main carriage-

exporter

importer

bank

none of the above

34. For examining documents concerned bank has maximum-

5 banking days

10 banking days

15 banking days

20 banking days

35. Bill of entry will be overdue after

90 days

21 days

120 days

7 days

36. The basic difference between a deferred L/C & a UsanceL/C is the issuance of Bill of Exchange

True

False

37. From which country Bangladesh received most of its Wage Earner’s Remittance?

U.S.A

Saudi Arabia

U.A.E

All of the above.

38. What is the name of the latest revision of incoterms

Incoterms 2010

Incoterms 2012

Incoterms 2011

Incoterms 2008

39. Import policy is issued by -

Bangladesh bank

Ministry of Finance

Ministry of Commerce

Association of bankers

40. Export business should be routed through-

Bangladesh Bank

Authorized Dealer

Ministry of Finance

None of the Above

41. What is the Time Limit for Shipment of Goods from LCAF issue date or registration date for any commercial items?

8 Month

9 Month

7 Month

11 Month

42. Export proceeds must be repatriated within -

90 Days

120 Days

180 Days

None of the Above

43. While importing through land ports Bill of Entry should be collected through importer.

True

False

44. ERQ stands For :

Export Requirement Quota

Export Retention Quality

Export Retention Quota

Export Retention Quantity

45. What is the elaboration of URR-

Uniform Rules for Reimbursement

Uniform Rules for Reimbursement under Documentary Credits

Uniform Rules for

Reimbursement under Documentary Collections

none of the above

46. Documents required in a documentary credit operation according to UCPDC includes-

transport documents

commercial invoice

insurance documents

all of the above

47. Issuing Bank’s liability is-

primary liability

secondary liability

no liability

none of the above

48. How many types of LC according to tenor?

49. Back to back LC has…….parties

50. FERA-1947 is applicable for

Residents

Bangladesh Citizens

Non-residents

Ques.

An Exporter must have.

Trade license

Export Registration Certificate(ERC) issued by the CCI & E

VAT -Registration

TIN Certificate

All of these

None of these

Ques.

Documents under UCPP 600

Commercial Invoice

Transport Documents

Insurance Documents

All of these

None of these

Ques.

Import can be made without L/C in few cases

True

False

Ques.

Import Registration Certificate is not required in case of import of capital machinery for new industry

False

True

Ques.

12)

Letter of Credit (LC) is a banking instrument used for-

Export- Import

Foreign Remittance

Local Money Transfer

Consumer Loan Security

None of these

Ques.		1)	Regulatory Frame work of International Trade-

a.		UCPDC, URC, URR, INCOTERMS

		True				False

Ques.		2)	LC is a conditional undertaking given by the Issuing bank to an exporter.

		True				False

Ques.		3)	ERC issued by Bangladesh bank.

a.		True		b.		False

Ques.		4)	Back to Back LC is opened to finance exporter.

a.		True		b.		False

Ques.		5)	Packing Credit is adjusted at the time of _____Negotiation_______


Ques.		6)	Date of Shipment is usually marked with ____On Board_____________ seal

Ques.		7)	In an LC an exporter is called -____Beneficiary ________________.

Ques.		8)	Export proceeds must be repatriated within ---120-----------days from the date of negotiation as per Bangladesh Bank Guidelines for Foreign Exchange Transaction.

Ques.		9)	IMP form is a control document

a.	True				b.		False

1. A resident is a person, bank or firm who/which resides/has a place of business outside Bangladesh (tick appropriate answer):

a) True b) False

Ans: b

2. Annual travel quota for release of foreign currency in a calendar year is? (tick appropriate answer):

a) USD5,000 b) USD12,000

Ans: b

3. Annual travel quota for release of foreign currency for non SARC countries in a calendar year is? (tick appropriate answer):

a) USD7,000 b) USD5,000

Ans: a

4. Maximum limit for cash foreign currency release under travel quota per instance is? (tick appropriate answer):

a) USD2,000 b) USD3000 c) USD5,000

Ans: c

5. Under AMU ADs may open Nostro accounts in which currencies (tick appropriate answers)?

a) ACU Dollar b) ACU Yen c) ACU GBP d) ACU Euro

Ans: a and d

6. ADs may maintain accounts in freely convertible currencies with their correspondents abroad (tick appropriate answer):

a) True b) False

Ans: a

7. For payments against imports the prescribed application form is ………… (Tick appropriate answer).

a) Form TM b) Form EXP c) Form IMP

Ans: c

8. The ADs may obtain short term loans and overdrafts not exceeding ………. at a time from overseas correspondents at the going market rate to meet their short term needs. (Tick appropriate answer).

a) 180 days b) 30 days c) 7 days

Ans: c

9. All authorizations for selling foreign exchange for outward remittances given by the Bangladesh Bank remain valid for a period not exceeding …………….from the date of approval unless they are expressly stated as valid for a specified longer period or unless they have been revalidated for a further period. (tick appropriate answer)

a) 15 days b) 30 days c)60 days

Ans: b

10. In case of remittances, received in advance for exports the ADs should obtain a signed declaration from the beneficiary on the back of the …………………certifying the purpose of remittance. (tick appropriate answer)

a) TM form b) EXP Form c) Advance Cash Receipt Voucher (ARV)

Ans: c

11. Transfer between non-resident Taka accounts are permitted freely. (please tick appropriate answer):

a) True b) False

Ans: a

12. Which of the following is correct? (tick the correct answer):

a) Payments from and receipts to the non-resident Taka accounts constitute purchase or inward remittances and sales or outward remittances respectively of foreign currency.

b) Payments from and receipts to the non-resident Taka accounts constitute sale or outward remittances and purchase or inward remittances respectively of foreign currency.

Ans: a

13. Remittances received against exports of goods should be certified and reported on ………….. (Tick appropriate answer)

a) Advance Cash Receipt Voucher b) Imp Form c) EXP Forms

Ans: c

14. Any person may take out of Bangladesh, Bangladeshi legal tender notes and coins not exceeding ……………….. only in value at any one time. (tick appropriate answer)

a) Taka 500 b) Taka 2000 c) Taka 5000

Ans: c

15. Any person ordinarily resident in Bangladesh may take out foreign exchange not exceeding ………… or its equivalent which was brought in without declaration at the time of returning from abroad. (tick appropriate answer)

a) USD3000 b) USD 5000 c) USD 10,000

Ans: b

16. It is not permissible to send currency notes and coins out of Bangladesh by post/courier or any other means. (tick appropriate answer)

a) True b) False

Ans: a

17. Import of goods into Bangladesh is regulated by ……………. in terms of the Import and Export (Control) Act, 1950 through Import Policy Order (IPO) in force. (tick appropriate answer)

a) The Ministry of Commerce

b) Ministry of Industries

c) Ministry of Finance

18. Import Policy Order (IPO) and Public Notices are issued from time to time by (tick appropriate answer) Con

a) The Office of the NBR

b) Controller General of Accounts

c) Office of the Chief Controller of Imports and Exports.

19. In terms of the Importers, Exporters and Indentors (Registration) Order, 1950/1969/1981 no person can import goods into Bangladesh unless he is registered with NBR/MCCI/CCI&E unless exempted from the provisions of the said Order. (tick appropriate answers)

Ans: 1950 and CCI & E

20. In case the importer is new customer, the AD should obtain certificate from the AD through which the applicant imported earlier to the effect that no …………………. is ………… for submission by the importer. (tick appropriate answer)

a) Bill of Lading & due b) Bill of Exchange & overdue c) Bill of Entry & overdue

21. The LCAFs, available with the ADs, are issued in sets of 3/4/5 copies each. Of these, the one marked as “Customs Purpose/Statistical Purpose/Exchange Monitoring Purpose” should be used for opening LC and for effecting remittance (tick appropriate answer)

Ans: 5 & Exchange Monitoring Purpose.

22. In case of import on FOB basis, full LCAF value is remittable. (tick appropriate answer)

a) True b) False

Ans: b

23. In case of import of items other than capital machinery and spares the LCAF remains valid for remittance for: (tick appropriate answer)

a) 9 months b) 12 months

Ans: b

24. In case of import of items for capital machinery and spares the LCAF remains valid for remittance for: (tick appropriate answer)

a) 12 months b) 17 months c) 18 months

Ans: b

25. DP stands for –(tick appropriate answer)

a) Deferred Payment b) Delivery against payment

Ans: b

26. Which of the following transport documents is a negotiable instrument?

a) Airway Bill b) Railway Receipt c) Bill of Lading d) Truck Receipt

Ans: c

27. Import of capital machinery is allowed to be opened upto maximum ………………. deferred payment/Usance basis without prior approval of Board of Investment. (tick appropriate answer)

a) 90 days b) 180 days c) 360 days

Ans: c

28. Import of Industrial Raw material for own use of industrial importers including back to back imports is allowed under Usance basis for a maximum of………………... (tick appropriate answer)

a) 360 days b) 180 days c) 120 days

Ans: b

29. Import of coastal vessels including oil tankers and ocean going vessels including those procured for scrapping is allowed under Deferred/Usance basis for a maximum of (tick appropriate answer).

a) 120 days b) 180 days c) 360 days.

Ans: c

30. Import of agricultural implements and chemical fertilizers is allowed maximum deferred payment of (tick appropriate answer)

a) 90 days b) 120 days b) 180 days c) 360 days

Ans: b

31. Deferred period for import of life savings drugs is maximum (tick appropriate answer)

a) 360 days b) 180 days c) 120 days d) 90 days.

Ans: d

32. What is the size of EDF available with Bangladesh Bank? (tick appropriate answer)

a) USD500 million

b) USD1000 million

c) USD1500 million

Ans: c

33. For a single exporter what is the maxim ceiling for EDF loan? (tick appropriate answer)

a) USD5 million

b) USD10 million

c) USD15 million

Ans: c

34. EDF interest rate:

a) 6 months LIBOR + 1.5%

b) 6 months LIBOR + 2%

c) 6 months LIBOR + 2.5%

Ans: c

35. “Re-export” means export of any imported item within specific period with at least ………… value addition to the import value after reprocessing the said imported item locally by changing either its quality or shape or both: (tick appropriate answer)

a) 5% b) 10% c) 7%

Ans: b

36. As per import policy we cannot import from following country: (tick appropriate answer)

a) Iran b) Israel c) Iran & Israel

Ans: b

37. H.S. Code Number for import purpose, use of H.S. Code with at least …….. ……. corresponding to the classification of goods as given in the First Schedule of the Customs Act,1969 (Act No. IV of 1969) based on the Harmonized Commodity Description and Coding System, shall be mandatory (tick appropriate answer)

a) 6 Digits b) 8 Digits c) 10 Digits

Ans: b

38. No import shall be allowed on CIF or CIP basis without prior approval from: (tick appropriate answer)

a) Ministry of Finance b) Ministry of Commerce

Ans: b

39. In all cases of import, “country of origin” shall be mentioned clearly on the package and container of goods. (tick appropriate answer)

a) Yes b) No

Ans: a

40. Import of any permissible item for an amount not exceeding …………… against LCA Form without opening of Letters of Credit s allowed only during each financial year against remittance made from Bangladesh. (tick appropriate answer)

a) USD100,000 b) USD50,000

Ans: a

41. A commercial importer can import capital machinery on upto 360 days usance basis.

a) Yes b) No

Ans: b

42. Unless otherwise specified, for import under cash foreign exchange, letter of credit shall be opened by all importers within ……. days from the date of issue /registration of LCA form: (tick appropriate answer)

a) 180 b) 150 c) 160

Ans: b

43. Shipment of goods shall be made within ………… months in the case of machinery and spare parts from the date of issuance of LCA Form by Bank (tick appropriate answer):

a) 9 Moths b) 17 Months c) 12 Months

Ans: b

44. Shipment of goods shall be made within ………… months in the case of all other items from the date of issuance of LCA Form by Bank (tick appropriate answer):

a) 9 Moths b) 17 Months c) 12 Months

Ans: a

45. L/C may be opened against an indent issued by a local registered Indentor or against a pro-forma invoice issued by a foreign manufacturer/seller/supplier

a) True b) False

Ans: a

46. Bangladeshi professionals living abroad may import their own professional and scientific equipments out of their own foreign exchange earnings abroad without any value ceiling. In such case, permission or permit from Import Control Authority shall not be required.

a) True b) False

Ans: a

47. In case of import of goods as warranty replacement and consequently for returning the defective goods to the supplier, approval is to be obtained from

a) The import and export control authority.

b) The Ministry of Commerce

c) The Board of Investment (BOI)

Ans: a

48. “Block list” required for import of

a) Industrial Raw Material b) Capital Machinery c) Raw and Packing materials for Pharmaceutical Industries.

Ans: c

49. Minimum rate of value addition required for “Export of knit garments”

a) 15% b) 25% c) 20%

Ans: c

50. Minimum rate of value addition required for “Export of all types of baby garments”

b) 15% b) 25% c) 20%

Ans: a

51. Second-hand/ reconditioned capital machineries used in industry shall be importable without any price limit but a certificate from a surveyor enlisted, nominated or appointed by National Board of Revenue to the effect that each machine has at least ……… years economic life except generators or generating sets, must be submitted along with Bill of Lading; (tick appropriate answer)

a) 5 Years b) 10 Years c) 7 Years

Ans: b

52. In case of import of generators or generating sets, certificates to the effect that not more than 5 (five) years old from the appropriate authority of exporting country must be submitted. (tick appropriate answer)

a) 5 Years b) 10 Years c) 7 Years

Ans: a

53. In case of import of ingredients, toxic chemical elements and raw materials, harmful for human health, used in industry, the word ……………. must be written visibly on each drum, bottle or packet.

a) ‘Danger’ b) ‘Harmful’ c) ‘poison’

Ans: c

54. Import of explosives including Trinitrotoluene (TNT) shall not be allowed without prior approval of:

a) Ministry of Defense

b) The Chief Inspector of Explosives of the Ministry of Power, Energy & Mineral Resources.

c) Ministry of Home

Ans: b

55. A firm or a person having license under Acid Control Act, 2002 (Act No. 1 of 2002)and Acid (Import, Production, Storage, Transport, Sale and use) Control Rules, 2004 will import acid mentioned in Sub-para (9) on commercial basis or for personal use subject to permission of the Ministry of Commerce.

a) The Ministry of Home b) The Ministry of Information c) the Ministry of Commerce

Ans: c

56. Gas Cylinder or Gas Container shall be importable with clearance certificate from

a) The Directorate of Explosives.

b) The Ministry of Defense

c) The Chief Inspector of Explosives of the Ministry of Power, Energy & Mineral Resources.

57. …………….. ………………… shall be applicable for import of animals, plants and plant products.

a) Quarantine conditions

b) Phytosanitary Certificate

c) Radioactivity Certificate

Ans: a

58. Item which does not appear in the ……. ……….. shall not be importable by the concerned pharmaceutical industry even if such item is otherwise freely importable;

a) Import permit b) Block List

Ans: b

59. In case of import of wine/liquor, date of expiry need not to be mentioned.

a) True b) False

Ans: a

60. In case of import of food items below the standard set by BSTI shall be returned to the exporting country/any third country at importer’s own cost. Such conditions should be added to L/C for imports of food items.

a) True b) False

Ans: a

61. Date of manufacture and date of expiry shall have to be written/printed on the container/package of those raw materials used in preparation of food and beverages which are to be unusable after certain period of time.

a) True b) False

Ans: a

62. In case of import of food items as relief goods by the Government shall be released subject to be found suitable for human consumption at the lab test conducted by

a) The Ministry Food.

b) The Ministry of Disaster Management and Relief

c) The Ministry of Health and Family Welfare

Ans: a

63. Any expatriate Bangladeshi with income earned abroad and any foreign investor with his share of equity can send capital machineries & raw materials on CIF or CIP basis

a) True b) False

Ans: a

64. Goods from foreign countries free of cost or gift items are importable on CIF or CIP basis

a) True b) False

Ans: a

Choose the correct answer

65. Article 1 of UCP 600 requires the text of the credit to…

a) Indicate that it is subject to the rules

b) Imply that it is subject to the rules

c) Say nothing as all credits are subject to UCP 600 automatically

Ans: a.

66. An issuing bank is irrevocably bound by the terms of the amendment as of the time

a) The issuing bank issues the amendment

b) The advising bank receives the amendment

c) The confirming bank agrees to confirm the amendment

d) The beneficiary receives the amendment

Ans: a.

67. An issuing bank is irrevocably bound to honour as of the time

a) The issuing bank issues the credit

b) The advising bank receives the credit

c) The advising bank sends the credit to the beneficiary

d) The beneficiary receives the credit

Ans: a.

68. A credit is issued for EUR10000 covering 10000 widgets at EUR 1 each. The credit amount is shown as being +/-10%. This tolerance applies to both the amount and quantity.

a) False

b) True

Ans: a.

69. The advising bank must ensure that the credit is genuine.

a) True

b) False

Ans: b.

70. A bank that is requested to advise a credit must send the credit to the beneficiary.

a) True

b) False

Ans: b.

Choose the correct answer(s)

71. According to UCP 600, a credit may be made available with a nominated bank in 4 different ways. Which of the following options indicate a correct way in which a credit may be made available with a nominated bank?

a) Negotiation

b) Mixed payment

c) Sight

d) Sight payment

e) Deferred payment

f) Avalisation

g) Acceptance

h) Usance

Ans: a, d,e and g

72. According to the definition in article 2 of UCP 600, negotiation means the nominated bank …

a) Receiving the documents, reviewing them for compliance and sending them to the issuing bank for Settlement

b) Receiving the documents, reviewing them for compliance, advancing funds to the beneficiary and sending them to the issuing bank for reimbursement

c) Receiving the documents, reviewing them for compliance, advancing or agreeing toadvance funds to the beneficiary and sending them to the issuing bank for reimbursement.

Ans: c.

73. When a nominated bank acting on its nomination, a confirming bank, if any, or the issuing bank decides to refuse to honour or negotiate, it must give a single notice to that effect to the presenter.

The notice must state:

i. That the bank is refusing to honour or negotiate; and

ii. Each discrepancy in respect of which the bank refuses to honour or negotiate; and

iii.

a) That the bank is holding the documents pending further instructions from the presenter; or

b) That the issuing bank is holding the documents until it receives a waiver from the applicant and agrees to accept it, or receives further instructions from the presenter prior to agreeing to accept a waiver; or

c) That the bank is returning the documents; or

d) That the bank is acting in accordance with instructions previously received from the presenter.

Ans: iii.

74. Under UCP 600, when an issuing bank determines that a presentation does not comply, prior to providing a notice of refusal, it may contact the applicant for a waiver of the discrepancies and the applicant will have a period of 5 business days in which to provide the waiver.

a) True

b) False

Ans: b.

Under UCP 600, all documents issued by the beneficiary must be dated no later than the date of

shipment.

a) True

b) False

Ans: b.

Choose the correct answer(s)

75. If a credit requires copies of a document, which of the following are acceptable:

a) Carbon copies

b) Photocopies

c) Originals

Ans: a, b and c.

76. Banks will accept as an original document one which appears to be

a) Written

b) Typed

c) On watermarked or embossed paper

d) On the issuer's original stationery

e) On sequentially numbered paper

Ans: a, b, d & e

77. The issuing bank, confirming bank, if any, and a nominated bank acting on its nomination shall each have a maximum period of ______ banking days following the day of presentation to determine if a

presentation is complying.

The number of banking days following the day of presentation is

a) 4

b) 5

c) 6

d) 7

Ans: b.

78. Commercial invoices must appear to be issued by the

a) Manufacturer

b) Pproducer

c) Beneficiary

d) Exporter

Ans: c.

79. A credit calls for a signed commercial invoice but the beneficiary presents an invoice that is not signed.As sub-article 18 (a) (iv) states that invoices need not be signed, the unsigned invoice is acceptable under UCP 600.

a) No

b) Yes

Ans: a.

80. Which of the following parties may not sign a bill of lading?

a) Master

b) Carrier

c) Agent of the carrier

d) Captain

e) Owner

Ans: e.

81. The date of a postal receipt is deemed to be the date of shipment.

a) True

b) False

Ans: a.

82. The credit is issued stating (amongst other insurance conditions) 'for 110% of the invoice value'. Does this mean that the insurance must be issued for 'exactly' 110% of the invoice value?

a) Yes

b) No

Ans: b.

83. According to UCP 600, insurance documents issued and signed by underwriters are not acceptable.

a) True

b) False

Ans: b.

84. Article 1 of UCP 600 requires the text of the credit to…

a) Indicate that it is subject to the rules

b) Imply that it is subject to the rules

c) Say nothing as all credits are subject to UCP 600 automatically

Ans: a.

85. If a credit uses the word “about” in connection to the amount of the credit or the quantity of the goods, the word “about” means that there is a tolerance in relation to the amount or quantity of:

a) +or- 10%

b) +10%

c) 0%

Ans: a.

86. A bank that is requested to advise a credit must send the credit to the beneficiary.

a) True

b) False

Ans: b.

87. A confirming bank must extend its confirmation to an amendment?

a) Yes

b) No

Ans: b.

88. Under UCP 600, which of the following parties make the decision as to whether or not documents represent a complying presentation?

a) The applicant

b) The issuing bank

c) The nominated bank

d) The confirming bank

e) The advising bank

Ans: b, c, and d

89. Reimbursement by an issuing bank for the amount of a complying presentation under a credit available by

acceptance or deferred payment is due at maturity

a) only if the nominated bank has prepaid or purchased before maturity

b) only if the beneficiary presents the accepted draft or deferred payment undertaking

c) whether or not the nominated bank prepaid or purchased before maturity

Ans: c.

90. An issuing bank must reimburse a nominated bank that has honoured or negotiated a complying

presentation

a) and forwarded the documents to the issuing bank

b) and forwarded the documents to the confirming bank or issuing bank

c) and claimed reimbursement from the reimbursing bank but has not been paid

Ans: a.

91. Under UCP 600, all documents issued by the beneficiary must be dated no later than the date of shipment.

a) True

b) False

Ans: b.

92. Commercial invoices must appear to be issued by the

a) manufacturer

b) producer

c) beneficiary

d) exporter

Ans: c.

93. Which of the following documents must be dated?

1. Commercial invoice.

2. Insurance certificate.

3. Non-negotiable sea waybill.

4. Certificate of origin.

Select one:

A. 1 and 2 only.

B. 1, 2 and 4 only.

C. 2, 3 and 4 only.

D. 2 and 4 only.

Answer: 2, 3 and 4 only.

94. If the term ‘exporting country’ is used in a credit without further definition being given in the credit as

to its meaning, it shall have which of the following meanings?

1. The country where the shipper is domiciled.

2. The country of origin of the goods.

3. The country of receipt of the goods by the carrier.

4. The country from which shipment or despatch is made.

Select one:

A. 1 and 2 only.

B. 1, 2 and 4 only.

C. 3 and 4 only.

D. 2, 3 and 4 only.

Answer: 2, 3 and 4 only.

95. A credit requires presentation of an insurance certificate covering risks in accordance with Institute Cargo Clauses (A). Which of the following would also be acceptable?

1. An insurance policy covering ‘all risks’.

2. An insurance policy covering ‘Institute Cargo Clauses (A)’.

3. An insurance certificate covering risks in accordance with Institute Cargo Clauses (B).

4. An insurance certificate covering risks in accordance with Institute Cargo Clauses (C).

Select one:

A) 1 only.

B) 2 only.

C) 3 and 4 only.

D) 1 and 2 only.

Answer: 2 only.

97. A credit that requires presentation of an invoice will be satisfied by which of the following?

1. Commercial invoice.

2. Proforma invoice.

3. Sales invoice.

4. Tax invoice.

Select one:

A) 2 and 4 only.

B) 1 only.

C) 1 and 3 only.

D) 1, 3 and 4 only.

Answer: 1, 3 and 4 only

98. Which of the following statements about drafts are correct?

1. It must be dated.

2. It must state its value in both words and figures.

3. There must be no conflict between the amount in words and figures.

4. Corrections and alterations need not be authenticated.

Select one:

A) 1 and 3 only.

B) 1, 2 and 3 only.

C) 1, 3 and 4 only.

D) 2 and 3 only.

Answer: 1 and 3 only.

99. A credit is issued for USD 350,000 on a cumulative basis allowing for 10 monthly drawdowns of

USD35,000. Assuming that USD 33,000 is drawn in month one and that USD 28,000 is drawn in

month two, what is the amount that can be drawn in month three?

Select one:

A) USD 35,000.

B) USD 42,000.

C) USD 44,000.

D) USD 105,000.

Answer: USD 44,000.

100. The buyer has the least risk by agreeing which of the following payment methods?

a) Documentary credit.

b) Payment in advance.

c) Open account trading.

d) Documentary collection.

Ans: c

101. An importer requires goods of a stipulated quality while the exporter requires certainty of

payment.

Which of the following would best meet all requirements?

a) A confirmed standby credit payable on demand calling for beneficiary's quality certificate.

b) A confirmed documentary credit payable at sight calling for beneficiary's quality certificate.

c) An unconfirmed documentary credit payable at sight with drafts on issuing bank calling for a

third-party quality certificate.

d) A confirmed documentary credit available by acceptance with drafts drawn on confirming

bank calling for a third-party quality certificate.

Ans: d

102. Which documentary credit enables a beneficiary to obtain pre-shipment financing without

impacting his facility?

a) Transferable.

b) Red clause.

c) Irrevocable, payable at sight.

d) Confirmed irrevocable, payable at maturity.

Ans: b

103. Which of the following statements is correct regarding transferable documentary credits?

a) The first beneficiary may request that confirmation be withheld from the transferred credit.

b) The first beneficiary may cancel the transferred credit without the second beneficiary's

consent.

c) A transferred credit can be transferred at the request of the second beneficiary to any

subsequent beneficiary.

d) The transferred credit may expire in the second beneficiary's domicile on the expiry date of

the first beneficiary's credit.

Ans: d

104. If a credit states that GBP 10,000 may be drawn each month during its one-year validity, then the

credit is:

a) Clean.

b) Revolving.

c) Evergreen.

d) Transferable.

Ans: b

105. In accordance with UCP 600, which of the following terms may not be altered when transferring a

documentary credit?

a) Credit amount.

b) Required documents.

c) Period for presentation.

d) Amount of insurance cover.

Ans: b

106. Where a documentary credit includes a shipping schedule and an instalment is not shipped within

the stipulated period, which of the following statements concerning the documentary credit is

correct?

a) It continues to be available for that instalment only.

b) It continues to be available for that and future instalments.

c) It ceases to be available for that instalment only.

d) It ceases to be available for that and future instalments.

Ans: d

107. A cumulative, revolving documentary credit for USD 22,500 allows full monthly drawings and is

valid for one year. Full monthly drawings were made during the first, second, fourth, fifth and

seventh months and there have been no other drawings. In the last month of the documentary

credit’s validity, what is the maximum value that can be drawn?

a) USD 22,500.

b) USD 112,500.

c) USD 157,500.

d) USD 180,000.

Ans: c

108. Which of the following percentages represents the minimum insured value on the insurance

document, unless otherwise stated in the documentary credit?

a) 100%.

b) 105%.

c) 110%.

d) 115%.

Ans: c

109. In accordance with UCP 600, all the following statements relating to commercial invoices are

correctexcept that they must:

a) Be manually signed by the beneficiary.

b) Be made out in the name of the applicant.

c) Appear to have been issued by the named beneficiary.

d) Indicate the description of goods corresponding with the documentary credit.

Ans: a

110. Uniform rules to govern documentary credit transactions were introduced for all of the following

reasonsexcept to:

a) Comply with international law.

b) Avoid disputes and misunderstandings.

c) Ensure consistency of approach across banks.

d) Obtain a common interpretation of documentary credits.

Ans: a

111. An advising bank receives the beneficiary's request to partially transfer an irrevocable transferable

documentary credit, which is freely available and does not nominate a transferring bank. In

accordance with UCP 600, the advising bank:

a) May transfer the documentary credit as requested.

b) May transfer the documentary credit only in its entirety.

c) Should request the issuing bank to authorise a partial transfer.

d) Should obtain the issuing bank's authorisation to act as the nominated transferring bank.

Ans: d

112. Which of the following statements is not correct for a credit that is subject to UCP 600?

If the credit:

a) A prohibits transhipment, an air transport document may indicate that transhipment will or maytake place.

b) Requires a bill of lading indicating freight prepaid, a notation of freight prepaid as per charterparty is acceptable.

c) Calls for one original rail transport document, presentation of a rail transport document marked‘duplicate’ is acceptable.

d) Calls for a multimodal transport document made out to order, an endorsement made by, for oron behalf of the shipper is required.

Ans: b

113. Financial Action Task Force recommendations require banks to exercise due diligence in their

relationships with customers. Banks are required to have procedures in respect of all of the

following, except to:

a) Know their customers.

b) Know what the goods will be used for.

c) Know the beneficial owners of the parties to a transaction.

d) Understand the nature of any underlying business relationship to the transaction.

Ans: b

114. To avoid the possibility of committing a money laundering offence, documentary credit

Practitioners should:

1. report any suspicion.

2. follow their bank's procedures.

3. stop any routine contact if they have a suspicion about a transaction.

4. not consider as suspicious any transaction from a branch of their bank in a high-risk country.

a) 1 and 2 only.

b) 1 and 3 only.

c) 2 and 4 only.

d) 3 and 4 only.

Ans: a

115. The ICC discourage sanction clauses in documentary credit transactions for all but one of the

following reasons. Which is the exception?

Because they may:

a) Be illegal.

b) Cause uncertainty for the beneficiary.

c) Cast a doubt on the bank's undertaking.

d) Give the bank discretion whether to pay or not.

Ans: a

116. By nominating a bank to incur a deferred payment undertaking without adding its confirmation, the

issuing bank:

a) Authorizes the nominated bank to purchase or prepay documents.

b) Authorizes the nominated bank to accept drafts under the usance agreement.

c) Allows the nominated bank to advance funds to the beneficiary upon demand.

d) Imposes an obligation on the nominated bank to honour or negotiate documents.

Ans: a

117. Which of the following banks must honour a complying presentation?

1. An issuing bank with which the documentary credit is available by acceptance.

2. A nominated bank under a freely negotiable credit payable at sight.

3. A confirming bank where the credit is available by sight payment and the nominated bank

Does not pay.

4. A reimbursing bank that has issued a reimbursement undertaking.

a) 1 and 3 only.

b) 2 and 3 only.

c) 1, 2 and 3 only.

d) 1, 2 and 4 only.

Ans: a

118. When a bank has accepted a usance draft, it is responsible for effecting payment at maturity when:

a) The draft is verified by the applicant.

b) The draft is presented by the beneficiary.

c) It has received funds from the issuing bank.

d) It has received funds from the reimbursing bank.

Ans: b

119. Which of the following statements is correct regarding a deferred payment obligation?

Payment is made:

a) Only by the issuing bank.

b) On the maturity date of the draft.

c) Upon presentation of complying documents.

d) At a future date in accordance with the documentary credit.

Ans: d

120. Which of the following is not an undertaking of the confirming bank for a credit available by:

a. Sight payment – to pay at sight.

b. Deferred payment – to incur a deferred payment undertaking.

c. Negotiation – to negotiate with recourse time draft drawn by the beneficiary.

d. Acceptance – to honour a time draft drawn on nominated bank if the nominated bank does not accept the time draft.

Ans: c

121. A beneficiary requests the confirming bank to purchase complying documents presented under adeferred payment credit. In accordance with UCP 600, which of the following actions could the confirming bank take?

1. Obtain the issuing bank's agreement prior to paying the beneficiary.

2. Refuse the beneficiary's request while undertaking to pay at maturity.

3. Prepay the deferred payment undertaking.

4. Obtain a recourse agreement from the beneficiary.

a) 1 only.

b) 4 only.

c) 2 and 3 only.

d) 3 and 4 only.

Ans: c

122. If a credit, available with the issuing bank, calls for a draft at 60 days after sight, it is available by:

a) Payment.

b) Negotiation.

c) Acceptance.

d) Deferred payment.

Ans: c

123. Two parties have agreed to trade and the seller requires the security of a documentary credit. The

buyer does not wish to pay for the goods until at least 30 days after their arrival at the discharge

port. Given that the journey will take a maximum of two weeks, which of the following will best suit

those requirements? A documentary credit available with a nominated bank at:

a) 45 days after sight.

b) 45 days after invoice date.

c) 60 days after invoice date.

D) 45 days after bill of lading date.

Ans: d

124. If a seller in country X wishes to receive payment from a buyer in country Y as soon as possible,

how should the documentary credit best be made available?

a) Negotiation with a nominated bank in country.

b) Acceptance by the nominated bank in country.

c) Sight payment with the issuing bank in country.

d) Sight payment with the nominated bank in country.

Ans: d

125. The beneficiary requires the return of its accepted time drafts in order to discount them in the

market. Which of the following best meets the beneficiary’s needs?

A documentary credit available with the:

a) Issuing bank by acceptance.

b) Advising bank by negotiation.

c) Nominated bank by negotiation.

d) Confirming bank by deferred payment.

Ans: a

126. Which of the following is discouraged under UCP 600?

a) The goods description field states ‘goods per the copy of the proforma invoice appended to the credit which forms an integral part of the credit’.

b) A copy of the sales contract is submitted with the credit application to the issuing bank and there is no reference to such attachment within the credit application.

c) The additional conditions field states that this credit is relative to sales contract XYZ and that all documents must state ’details per purchase order 123 and contract XYZ’.

d) A copy of the purchase order is provided to the issuing bank for information purposes only and the goods description field of the credit application includes details of the purchase order.

Ans: a

127. An issuing bank notifies the beneficiary that the applicant has ceased trading and that the

documentary credit is cancelled and that cancellation shall be effective ten days after the date of

the issue of its cancellation notice. The beneficiary presents documents to the issuing bank that

otherwise fully comply with the credit terms fifteen days after the date of the cancellation notice.

The issuing bank:

a) Is obliged to honour the documents.

b) May simply return the documents unchecked as the credit has now ceased to exist.

c) Should hold the documents unchecked and seek further instructions from the beneficiary.

d) May refuse the documents as more than ten days have elapsed since the issue of its

cancellation notice.

Ans: a

128. Which of the following documents must be presented to the carrier to obtain release of the

underlying goods?

1. Air transport document.

2. Bill of lading.

3. Charter party bill of lading.

4. Non-negotiable sea waybill.

a) 1 and 2 only.

b) 1 and 4 only.

c) 2 and 3 only.

d) 3 and 4 only.

Ans: c

129. A marine bill of lading acts as:

1. an acknowledgement of receipt of the goods by the carrier.

2. evidence of a contract of carriage.

3. a document of title for the goods.

4. evidence of the contract between the seller and the forwarding agent.

a) 1 and 4 only.

b) 2 and 3 only.

c) 1, 2 and 3 only.

d) 2, 3 and 4 only.

Ans: c

130. Which of the following do not constitute partial shipment for goods shipped from the same place to

the same destination?

Presentation of:

1. a courier receipt evidencing receipt of two separate packages.

2. a road transport document indicating two different trucks.

3. two separate courier receipts dated at different times of the same day by the same courier

service.

4. two separate road transport documents indicating the same date of shipment but each

indicating a different truck.

a) 1 and 2 only.

b) 1 and 3 only.

c) 1, 2 and 3 only.

d) 3 and 4 only.

Ans: b

131. A documentary credit calls for invoices for the full CIF value and insurance certificate covering all risks. Documents presented include invoices for the CIF value of USD 150,000 less discount ofUSD 25,000; a bill of lading evidencing shipment on 10 February; and insurance policy, issued on11 February, for USD 137,500 and effective from 09 February covering Institute Cargo Clauses A.

According to UCP 600, all of the following statements are correct except:

a) The insurance policy is acceptable.

b) The insurance covers shipment period.

c) The amount of the insurance cover is sufficient.

d) The risks covered by insurance document are acceptable.

Ans: c

132. Which of the following documents must be signed?

a) Packing list.

b) Certificate of origin.

c) Commercial invoice.

d) Weight specification.

Ans: b

133. A credit is payable against drafts drawn at 30 days after bill of lading date and requires shipment to be effected from any European port. The bill of lading indicates receipt of the goods by the carrier on 11 June XXXX, an on-board notation for vessel ‘A’ dated 13 June XXXX at Felixstowe, and transhipment at Hamburg with an on board notation for vessel ‘B’ dated 16 June XXXX which has been subsequently amended by the

carrier to read as 15 June XXXX. The maturity date for the draft is:

a. 11 July XXXX.

b. 13 July XXXX.

c. 15 July XXXX.

d. 16 July XXXX.

Ans: b

134. A documentary credit calls for the beneficiary's invoice in three copies. Which of the following

requirements is mandatory for a complying presentation?

a) All must be signed.

b) All must be original.

c) At least one of the three must be signed.

d) At least one of the three must be original.

Ans: d

135. In accordance with ISBP, an invoice may show:

1. deduction for a discount not stated in the credit.

2. over-shipment of goods provided they are stated to be free of charge.

3. shipment of goods not called for in the credit.

4. shipment of goods not called for in the credit provided they are stated to be free of charge.

a) 1 only.

b) 2 only.

c) 1 and 3 only.

d) 2 and 4 only.

Ans: a

136. A documentary credit is issued for approximately GBP 40,000 with drafts at 30 days from date of

shipment. Documents are presented on 22 September with bills of lading dated 01 September.

Which of the following drafts would comply?

1. 30 days from 01 September for approximately GBP 40,000.

2. 30 days from date of shipment for GBP 38,000.

3. Due 01 October for GBP 42,000.

4. 30 days from bill of lading date 01 September for GBP 44,000.

a) 1 and 2 only.

b) 1 and 3 only.

c) 2 and 4 only.

d) 3 and 4 only.

Ans: d

137. An irrevocable confirmed documentary credit cannot be amended or cancelled without the

agreement of the:

a) Beneficiary and applicant.

b) Confirming bank and issuing bank.

c) Applicant, confirming bank and issuing bank.

d) Beneficiary, confirming bank and issuing bank.

Ans: d

138. A documentary credit requires the bill of lading to state the name and address of the carrier’s agent

at the port of discharge. To comply with the credit terms, the agent:

a) Can be at any location in the world.

b) Must be located at the port of discharge.

c) Must be located in the same country as the port of discharge.

d) Must be located in the same geographical area as the port of discharge.

Ans: a

139. A buyer wishes to import 300 sports cars from their supplier over a three month period. Import regulations will only allow a maximum of 100 sports cars to be shipped into the country each month by the buyer without the imposition of import duties and port-to-port shipment takes a maximum of ten days. Which of the following shipment schedules will best protect the buyer from the imposition of

Import duties?

a) 100 cars in January, 100 cars in February, 100 cars in March.

b) 100 cars in the middle of January, 100 cars in the middle of February, 100 cars in the middle of March.

c) 100 cars by the end of January, 100 cars by the end of February, 100 cars by the end of

March.

d) 100 cars at the beginning of January, 100 cars at the beginning of February, 100 cars at the

beginning of March.

Ans: d

140. A confirming bank receives a documentary credit containing the following additional condition:

’carrying vessel must not be older than 15 years’. Upon receipt of the documents from the

beneficiary, the confirming bank must:

a) Look for this statement on one of the documents.

b) Deem such a condition as not stated and disregard it.

c) Require the beneficiary to issue a statement of compliance.

d) Refuse payment to the beneficiary until receipt of the issuing bank's clarification.

Ans: b

141. In accordance with UCP 600, which of the following documents is not acceptable in a documentary

credit issued on 01 March with documents presented on 01 June and expiring on 10 June?

a) Certificate of origin dated 28 February.

b) Third party certificate of quality dated 02 June.

c) Weight certificate issued by the beneficiary dated 15 May.

d) Bills of lading evidencing third party as consignor dated 28 May.

Ans: b

142. A reimbursing bank has received a valid claim under its reimbursement undertaking and is

simultaneously instructed by the issuing bank not to honour the claim. In accordance with the URR

725, the reimbursing bank should:

a) Request the claiming bank to cancel the claim.

b) Instruct the claiming bank to contact the beneficiary.

c) Honour the claim and debit the issuing bank's account.

d) Dishonour the claim as per the issuing bank's instruction.

Ans: c

143. At the request of the issuing bank, a reimbursing bank has issued its reimbursement undertaking in

favour of a nominated bank. The beneficiary notify the nominated bank of the documentary credit

and subsequently presents documents direct to the issuing bank for settlement.

What best describes the action that the issuing bank should now take?

a) Check the documents and, if compliant, make payment to the beneficiary through the

reimbursing bank.

b) Check the documents and, if compliant, make payment to the beneficiary and seek

cancellation of the reimbursement undertaking.

c) Return the documents to the beneficiary and request that documents be presented through

the nominated bank.

d) Return the documents to the beneficiary and request that documents be presented to the

reimbursing bank to enable the reimbursement undertaking to be utilised.

Ans: b

144. If a bank requests that an electronic record be re-presented because the initial presentation

Appears to be corrupted, the:

a) Date of the re-presentation becomes the new presentation date.

b) Beneficiary has 21 calendar days to re-present the electronic record.

c) Time for examination is suspended and resumes when the re-presented records are received.

d) Re-presentation may be with paper documents even if the documentary credit calls for

electronic records.

Ans: c

145. A documentary credit pre-advice is issued on 01 March for USD 510,000 with the following terms

and conditions:

Partial shipment allowed.

Latest shipment date 30 April.

Expiry date 15 May.

On 02 March the applicant requests an amendment prohibiting partial shipment and extending the

expiry date to 30 May. In accordance with UCP 600, what action must the issuing bank take?

a) Clarify with the applicant the period for presentation.

b) Issue the documentary credit incorporating all the amendments.

c) Issue the documentary credit incorporating only the extended expiry date.

d) Issue the documentary credit as originally instructed, without amendments.

Ans: d

146. Documents presented to the issuing bank have been found discrepant. The bank has left a

message for the applicant to discuss the discrepancies.

The bank should:

a) return the documents to the presenter.

b) continue to hold the documents until discussion with the applicant. No further action is

required.

c) send notice of refusal to the presenter, listing all discrepancies and current disposition of the

documents.

d) send notice of refusal to the presenter without listing discrepancies, as the applicant has not

been consulted.

Ans: c

147. Which of the following statements are correct in relation to documentary credit risks?

1. The advising bank incurs payment risk by advising an unconfirmed credit.

2. A negotiating bank is not concerned with issuing bank counterparty risk when making

payment to the beneficiary.

3. The confirming bank’s main risk is that of non-reimbursement by the issuing bank after

Effecting the payment to the beneficiary.

4. A reimbursing bank that has not issued a reimbursement undertaking does not have any risk

related to the credit.

a) 1 and 2 only.

b) 1 and 4 only.

c) C 2 and 3 only.

d) D 3 and 4 only.

Ans: d

148. When a bank confirms an irrevocable transferable documentary credit, it assumes the credit risk of

which party?

a) The applicant.

b) The issuing bank.

c) The first beneficiary.

d) The second beneficiary.

Ans: b

149. The issuing bank of a sight documentary credit issues an indemnity to a shipping company

authorizing the release of goods to the importer prior to presentation of documents. Documents

subsequently received are discrepant. What action must the issuing bank take?

1. Seek agreement from the shipping company to cancel the indemnity.

2. Send a rejection notice to the presenting bank.

3. Approach the applicant for a waiver of the discrepancies.

4. Pay the presenting bank.

a) 2 only.

b) 4 only.

c) 1 and 4 only.

d) 2 and 3 only.

Ans: b

150. When an advising bank adds its confirmation to a documentary credit, which of the following risks

has the beneficiary mitigated?

1. Issuing bank., 2. Foreign exchange., 3. Political and 4. Fraud.

a) 1 and 3 only.

b) 1 and 4 only.

c) 2 and 3 only.

d) 2 and 4 only.

Ans: a

151. Which of the following statements does not relate to documentary credit risks?

a) The issuing bank may try to mitigate the risk of non-reimbursement from the applicant by

retaining title to the goods.

b) In the event of failure of the issuing bank, the beneficiary may need to rely on payment

directly from the applicant.

c) A forward foreign exchange contract may provide a hedge against a difference in exchange

rates to the issuing bank.

d) The issuing bank may not be able to honour its obligation to pay on the maturity date due to

governmental action.

Ans: c

151. The beneficiary can mitigate the risk of ‘force majeure’ by requesting that the documentary credit

Be made available with:

a) Any bank.

b) The issuing bank.

c) The advising bank.

d) The confirming bank.

Ans: a

153. Documents, including the CMR consigned to the issuing bank, have been delayed in transit

between the confirming bank and the issuing bank. The applicant requires the goods urgently and

therefore requests from the issuing bank a:

a) Delivery order.

b) Letter of indemnity.

c) Performance guarantee.

d) Shipping company guarantee.

Ans: a

154. A third-party supplier requires a notice of assignment of proceeds from the nominated bank prior

To shipping the goods. This notice of assignment:

a) Is an irrevocable undertaking to pay the third-party supplier.

b) Authorizes the third-party supplier to perform the role of the beneficiary.

c) Guarantees payment upon presentation of documents by the third-party supplier.

d) Is a conditional undertaking from the nominated bank to pay the third-party supplier from proceeds, if any, payable under the credit.

Ans: d

155. To clear the goods in the absence of an original bill of lading, which document should the applicant

request from the issuing bank?

a) An indemnity.

b) A delivery order.

c) A payment guarantee.

d) A shipping company guarantee.

Ans: d

156. Under a confirmed credit established in favour of a corporate beneficiary on a syndicated basis, all

of the following aspects will be commonly covered by the syndicate agreement except:

a) The handling of discrepant documents.

b) The handling of commercial disputes between the corporate beneficiary and the applicant.

c) Whether the other syndicate banks will wish to approve the text of the credit and

amendments.

d) Whether the lead bank's checking of documents will be acceptable to the other syndicate

banks.

Ans: b

157. Which of the following statements is correct when an assignment of proceeds has been effectedunder a documentary credit issued in accordance with UCP 600?

The:

a) A assignee must present complying documents to receive payment.

b) B assignee will receive payment of the proceeds directly from the applicant.

c) C value of the documentary credit is reduced by the amount of the assignment.

d) D beneficiary has assigned its rights to the stated amount of proceeds to the assignee.

Ans: d

158. Which of the following statements would not be included in an applicant's counter indemnity when

requesting a delivery order?

The applicant:

a) Indemnifies the bank against all actions, damages and costs.

b) Undertakes to accept the underlying documents irrespective of discrepancies.

c) Gives the issuing bank authority to debit its account for the full value pending inspection of

the goods.

d) Undertakes that should the goods form part of a large consignment it will accept that

consignment and pay the full value.

Ans: c

159. In accordance with UCP 600, which of the following terms may not be altered on a transferred

documentary credit.

a) Amount.

b) Required documents.

c) Period of presentation.

d) Amount of insurance cover.

Ans: b

160. A documentary credit for USD 150,000.00 calls for a full set of bill of lading and an

insurance Certificate that covers all risks. The bill of lading presented indicates an on board

date of 15 December.

Which of the following insurance document are acceptable?

1. Policy for USD 185,000.00

2. Certificate dated 17 December.

3. Declaration signed by a broker.

4. Subject to a franchise.

a) 1 and 2 only.

b) 1 and 4 only.

c) 2 and 3 only

d) 3 and 4 only

Ans: b

161. If a credit states “ first shipment is to be effected on or about’20 august 2010”, this means

Shipment can be effected during the period

a) 14 August – 15 August

b) 15 August – 26 August

c) 15 August – 25 August

d) 16 August – 25 August

Ans: c

162. An issuing bank is irrevocably bound by the terms of the amendment as of the time

a) the issuing bank issues the amendment

b) the advising bank receives the amendment

c) the confirming bank agrees to confirm the amendment

d) the beneficiary receives the amendment

Ans: a

163. A Documentary credit is issued for an amount of USD 10,000 & calls for its drafts to be

drawn at 30 days from bill of lading date .Documents have been presented with a bill of

lading dated 09 November 2009 which of the following tenor on the draft will not be

acceptable?(Mark Tick)

a) 09 December 2009.

b) 30 days from bill of lading date.

c) 30 days after 09 November 2009.

d) 30 days date, draft dated 09 November 2009.

Ans: b

164. Which of the following documents MUST be signed?

a) Packing list..

b) Certificate of origin.

c) Commercial Invoice.

d) Weight Specification.

Ans: b

165. A Credit requires an ‘Invoice’ without further definition. Which of the following “MUST be

considered a discrepancy?

a) Presentation of a document identified as a tax invoice..

b) An invoice which is not signed..

c) An invoice made out in a different currency to the credit.

d) An invoice issued for an amount in excess of that permitted by the credit.

Ans: c

166. Mention maximum deferred period allowable for import of the following items As per GFET:

a) Capital Machineries upto ……….. days.

b) Agriculture implements and chemical fertilizer upto ……….days.

c) Life saving Drugs upto ………………days.

Ans: a) 360. b) 180, c) 90

167. Which party/ parties can not sign the charter party Bills of Lading.

a) Captain.

b) Master.

c) Carrier.

d) Owner.

e) Charterer.

Ans: a

168. A bill of lading states that “Packaging may not be sufficient for the sea journey”. Would this

constitute a discrepancy.

a) Yes

b) No.

Ans: b

169. A Documentary Credit advised to a Beneficiary payable at sight calls for document to include an

Invoice made out in the name of the Applicant. Document presented to the Negotiating bank by

The Beneficiary include a Custom Invoice but no Commercial Invoice. All other terms and

Conditions have been met. What action should the negotiating bank take?

a) Reject the document as non-complying.

b) Refer to the issuing bank for authority to pay.

c) Return the document for amendment by the beneficiary.

d) Pay the documents as fully complying with the terms of the credit.

Ans: d

170. A documentary credit pre-advice is issued on 1 March for USD 2,00,000.00 with the following

terms and conditions:

- Part shipment allowed.

- Latest shipment date 30 April.

- Expiry date 15 May.

On 2 March the applicant requests an amendment prohibiting part shipment and extending the expiry date to 30 May . In accordance with UCP 600 what must the issuing bank do?

a) Clarify with the applicant the period of presentation.

b) Issue the documentary credit as originally instructed.

c) Issue the documentary credit incorporating all the amendments.

d) Issue the documentary credit incorporating only the extending expiry date.

Ans: b

171. The Uniform Rules for Bank-to-Bank Reimbursements applies to –

a) Documentary Credit

b) Documentary Collection

c) SWIFT Fund Transfer

d) All of the above

Ans: a.

172. URR725 is binding on all parties thereto, unless expressly modified or excluded by the –

a) Documentary Credit

b) Reimbursement authorization

c) Instruction to the negotiating bank

d) Payment Instruction

Ans: b.

173. Reimbursement authorization is ____________ the credit.

a) Independent of

b) Dependent on

Ans: a.

174. A nominated bank can claim reimbursement even if it does not negotiate / honor the presentation.

a) True

b) False

Ans: b.

175. Advice of reimbursement undertaking amendment is sent from –

a) Issuing bank to Reimbursing Bank

b) Reimbursing bank to nominated bank

c) Reimbursing bank to claiming bank

d) All of the above

Ans: c.

176. Under URR725 Issuing bank should provide necessary information in –

a) Documentary Credit

b) Reimbursement Authorization

c) Reimbursement Undertaking

d) All of the above

Ans: a and b.

177. If Issuing Bank requires certificate of compliance in the reimbursement authorization, the

reimbursing bank should

a) Disregard it

b) Follow it

Ans: b.

178. If the reimbursing bank is requested to accept and pay a time draft, the reimbursement

authorization must indicate the following:

a) tenor of draft to be drawn;

b) drawer;

c) party responsible for acceptance and discount charges, if any.

d) All of the above

Ans: d.

179. Pre-notification of a reimbursement claim to the issuing bank must be included in the

a) Documentary Credit

b) Reimbursement authorization

c) Both

Ans: a.

180. If a credit is available with any bank, amendment of reimbursement authorization must be sent to –

a) Reimbursing bank

b) Advising Bank

c) Both

Ans: c.

181. An irrevocable reimbursement authorization cannot be amended or cancelled without the

agreement of the

a) Reimbursing bank.

b) Advising Bank

c) Both

Ans: a.

182. The terms of the original irrevocable reimbursement authorization (or an authorization

incorporating previously accepted irrevocable reimbursement authorization amendments) will

remain in force for the reimbursing bank until it communicates its acceptance of the amendment to

the -

a) Issuing bank

b) Advising Bank

c) Nominated Bank

Ans: a.

183. A reimbursing bank is not required to accept or reject an irrevocable reimbursement authorization

amendment until it has received acceptance or rejection from the _______ of its reimbursement

undertaking amendment.

a) Issuing bank

b) Advising Bank

c) Claiming bank

Ans: c.

184. The claiming bank's claim for reimbursement must be in the form of a –

a) Teletransmission

b) Signed Claim

c) Any of the above

Ans: a.

185. In the case of a reimbursement undertaking, the claim must comply with the terms and conditions

of the

a) Documentary Credit

b) Reimbursement undertaking.

c) Reimbursement Authorization

Ans: b.

186. When a time draft is to be drawn on the reimbursing bank, the claim must include the following –

a) General description of the good

b) Country of origin

c) Place of destination or performance

d) All of the above

e) None

Ans: d.

187. A reimbursing bank shall have a maximum of _____ banking days following the day of receipt of the

reimbursement claim to process the claim.

a) Three

b) Five

c) Seven

Ans: a.

188. Except in case of a reimbursement undertaking if a reimbursement is due on a future date, a claims

should not be presented to the reimbursing bank more than ____ banking days prior to such

predetermined date.

a) Three

b) Five

c) Seven

d) Ten

Ans: d.

189. Unless otherwise stated, a reimbursing bank's charges are for the account of the

a) Issuing bank

b) Claiming bank

c) Beneficiary

Ans: a.

190. If the claiming bank indicates additional charges in the reimbursement claim, those charges will be

a) In addition to the amount of authorization

b) Deducted from the amount of authorization

c) Will not be honored

Ans: a.

191. Who bears the risk of any ambiguity in its instruction to issue or amend a credit as per paragraph 2

of ISBP?

a) Issuing Bank

b) Negotiating Bank

c) Beneficiary

d) Applicant

Ans: d

192. Document issued and marked as “Duplicate’’ will be regarded as

a) Original Document

b) Copy Document

Ans: a

193. Detailed mathematical calculations in documents will be checked by banks

a) True

b) False

Ans: b

194. Corrections and alterations in documents issued by the beneficiary which have not been legalized,

visaed, certified or similar, need not be authenticated except:

a) Certificate of Origin

b) Invoice.

c) Draft

d) Packing List..

Ans: c.

195. Description as “model 234” instead of “model 432” in commercial invoice would not be regarded as

a typing error and would constitute a discrepancy.

a) False

b) True

Ans: b.

196. As per ISBP which statement is correct:

a. Copies of documents need not be signed.

b. Copies of documents may not be signed.

c. Copies of documents must not be signed.

d. Copies of documents should not be signed.

Ans: a.

197. “Invoice”, “One Invoice” or “Invoice in 1 copy”, it will be understood to be a requirement for an:

1. Copy Invoice.

2. Original invoice.

3. Invoice in original Stationery.

4. Invoice produced by a telefex machine.

Which of the following is correct?

a) B

b) A & B

c) B & D

d) B & C

Ans: d.

198. A credit subject to UCP 600 specified a reimbursement instruction that reads:

"Upon receipt of full set of documents in conformity with the letter of credit terms and conditions,

we will effect payment as per your instructions".

Compliant presentation was made to the nominated negotiating bank which was not negotiated by

the nominated bank and claimed for reimbursements.

The Documents were however lost in transit by the courier company. The issuing bank refused

reimbursement because reimbursement would only be effective

"upon receipt of documents" as specified in the reimbursement instruction quoted above.

Is the issuing bank correct in its refusal decision?

a) Yes

b) No.

Ans: b.

199. A credit requires an 'invoice' without further definition. Which of the following

MUST be considered a discrepancy?

a. Presentation of a document identified as a tax invoice.

b. An invoice which is not signed.

c. An invoice made out in a different currency to the credit.

d. An invoice issued for an amount in excess of that permitted by the credit.

Ans: c.

200. If Additional information given in “shipping marks” such as the type of goods, warnings as to the

handling of fragile goods, net and/or gross weight of the goods, etc. will be a discrepancy.

a) Yes

b) No.

Ans: b.

201. Shipping Documents means?

a. All Documents except Bill of Lading

b. All Documents except Transport Document

c. All Documents except Draft

d. Only transport Documents

Ans: c.

201. Exporting country Means?

a. The country of origin of the goods.

b. The country from which shipment or dispatch is made.

c. The country from where the beneficiary is domiciled.

d. Country of receipt by the carrier.

e. All of the above except ‘D’.

f. All of the above A, B, C, D,.

Ans: f.

202. Which documents must be dated even if a credit does not expressly so require:

a) Invoice, draft & certificate of origin.

b) Draft, transport documents and insurance documents.

c) Invoice, packing list & beneficiary certificate

d) Insurance cover note, packing list & inspection certificate.

Ans: b.

203. Which of the following statement is appropriate as per ISBP.

a. The draft should be drawn by the beneficiary.

b. The draft must be drawn by the beneficiary.

c. The draft may not be drawn by the beneficiary.

d. The draft must not be drawn by the beneficiary.

Ans: b.

204. L/C requires exactly 110% of insurance coverage, as per UCP a beneficiary can provide insurance

coverage more than 110%.

a) True

b) False

Ans: b.

205. "One copy of Invoice", it will be satisfied by presentation of :

a) a copy of an invoice.

b) an original of an invoice.

c) either a copy or an original

d) Above all.

Ans: d.

206. Which Document is not a Shipping document as per ISBP?

a. Bill of Lading

b. Certificate of Origin.

c. Bill of Exchange.

d. Commercial Invoice.

Ans: c.

208. Alteration on a draft must authenticate by drawer?

a) True

b) False

Ans: a.

209. Bill of lading bearing a clause that the packaging is not sufficient for sea Journey which one of the

following is correct?

a) Claused B/L

b) Clean B/L

c) None of the above.

Ans: a.

210. A credit states that, Freight Forwarder’s Multimodal transport document is acceptable. In this case

name of the carrier is not necessary to show in the B/L.

a. True

b. False

Ans: a.

211. L/C requires a Document to be prepared at least 2 days before the B/L Date. B/L presented dated

15.12.2011. Which or the following is correct:

a. Document dated 11.12.2011

b. Documents dated 01.12.2011

c. Document dated 12.12.2011

d. Above all

Ans: d.

212. Which one of the following is not Original;

a. Issued on the documents Issuers original Stationary

b. Typed Document

c. Perforated

d. Produced on a Telefax machine

Ans: d.

213. Description of the goods must be stated in AWB.

a. True

b. False

Ans:b.

214. A straight Bill of Lading is not negotiable.

a. True

b. False

Ans: a.

215. An Insurance Document is subject to an Expiry Date for Claim.

a. True

b. False

Ans: b.

Incoterms, Inco terms

MCQ on UCPDC 600 | multiple choice questions on letter of credit |