1. The buyer incurs 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.

2. 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.

3. Which of the following is true of both collections and letters of credit? They both:

A enable the seller to increase the price of the goods after sale

B give assurance that the goods will be safe during shipment

C guarantee payment in advance

D provide basis for exchanging documents for payment

3. Which documentary credit enables a beneficiary to obtain pre-shipment financing without impacting his
facility?

A Red clause.

B Transferable.

C Irrevocable, payable at sight.

D Confirmed irrevocable, payable at maturity.

4 Which of the following is a provider of credit insurance?

A Atradius

B ICC

C CIA

D Moody’s

5 COFACE is a government organisation that specilises in:

A export insurance

B import logistics

C money laundering detection

 D trade legislation

6. 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 country of domicile on the expiry date
of the first beneficiary's credit.

7. 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 reinstatable.

8. Which of the following would not require a bank facility for the importer?

A avalisation of a bill of exchange

B documentary collection

C documentary credit

D duty deferment guarantee

9. Under ‘FCA Southampton Container Depot’ terms, which of the following most accurately describes the
responsibilities of the importer? Make arrangements at own cost and risk to cover the transport of goods from:

A Southampton Container Depot to own premises

B Southampton Container Depot to own premises and arrange insurances

C Southampton Container Depot to own premises, covering the costs of insurance, any import licences
and custom duties

D Southampton Container Depot to own premises, covering the costs of insurance and customs duties.

10. 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.

11. 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.

12. ISP 98 states that in the event of dishonour, timely notice must be given. This means that more than:

A 24 hours is unreasonable

B 48 hours is unreasonable

C 3 days is unreasonable

D 7 days is unreasonable

13. 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.

14. Which of the following percentages represent the minimum insured value on the insurance
document, unless otherwise stated in the documentary credit?

A 100%.
B 105%.
C 110%.
D 115%.

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

EXCEPT 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.

16. Country A imposes economic sanctions against Country B when it carries out
unauthorised nuclear testing. Your company which is bases in Country A trades regularly with
Country B. This represents:

A environmental risk

B legal risk

C political risk

D technological risk

17. The World Trade Organisation is primarily concerned with:

A International contract law

B providing international trade finance

C reduction of tariff barriers

 D regulating international payments

18. 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.

19. Financial Action Task Force (FATF) recommendations require banks to exercise due diligence in their
relationships with customers. Banks are required to have procedures to confirm all of the following,
EXCEPT:

A the identity of their customer.

B what the goods will be used for.

C who the beneficial owners of the parties to a transaction are.

D the nature of any underlying business relationship

20. 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 any transaction from a branch of their bank in a high-risk country as suspicious.

A 1 and 2 only.

B 1 and 3 only.

C 2 and 4 only.

D 3 and 4 only.

21. 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.

22. 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.

23. 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

24. 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 a time draft drawn by the beneficiary.

D acceptance - to honour a time draft drawn on a nominated bank if the nominated bank does not
accept the time draft.

25. 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.

26. 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 the buyer's
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.

27. 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 X.

B Acceptance by the nominated bank in country X.

C Sight payment with the issuing bank in country Y.

D Sight payment with the nominated bank in country X.

28. 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

29. Which of the following documents must be presented 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

30. 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.

31. 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 3 and 4 only.

D 1, 2 and 3 only.
32. Which of the following documents MUST be signed?

A Packing list.

B Certificate of origin.

C Commercial invoice.

D Weight specification.

33. A documentary credit calls for the beneficiary's invoice in 3 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

34. An irrevocable confirmed documentary credit CANNOT be amended or cancelled without the
agreement of the:

A beneficiary and applicant only.

B confirming bank and issuing bank only.

C applicant, confirming bank and issuing bank only.

D beneficiary, confirming bank and issuing bank only.

35. 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.

36. 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 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.

37. 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.

38. 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.

4. Fraud.

A 1 and 3 only.

B 1 and 4 only.

C 2 and 3 only.

D 2 and 4 only.

39. Which of the following statements does NOT relate to documentary credit risks?

A The issuing bank may not be able to honour its obligation to pay on the maturity date due to
governmental action.

B In the event of failure of the issuing bank, the beneficiary may need to rely on payment
directly from the applicant.

C The issuing bank may try to mitigate the risk of non-reimbursement from the applicant by
retaining title to the goods.

D A forward foreign exchange contract may provide a hedge against a difference in exchange rates
to the issuing bank

40. When insurance is provided on an invoice finance facility, the facility is said to be:

A with acceptance

B with recourse

C without acceptance

D without recourse