CDCS Examination – Model Question Paper – I Covering Chapters 1, 2 and 3 from CDCS Book 2014
Marks:
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Time: 1 hour
NAME OF THE CANDIDATE: DEPARTMENT: UID: MARKS SCORED: DATE:
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1.) Which of the following is NOT a risk to a beneficiary with regard to an unconfirmed credit? A.) Failure to comply with credit conditions B.) Insolvency of issuing bank C.) Loss of goods in transit D.) None of the above
2.) In a LC 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 dest ination charges to pay
3.) A documentary credit for USD 120,000.00 12 0,000.00 calls for shipment of fertilizer in F ebruary, March, April and May. Each shipment is to be for about 500 tonnes. Shipment was effected as follows: 1. 450 tonnes sent 24 February for value USD 27,000.00. 2. 550 tonnes sent 12 April for value U SD 33,000.00. 3. 460 tonnes sent 30 April for value U SD 28,000.00. 4. 550 tonnes sent 04 June for value USD 33,000.00. Which of the above shipments will be honored on presentation? A.) 1 only. B.) 1 and 3 only. C.) 2 and 4 only. D.) 1, 2 and 3 only.
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4.) Which of the following is TRUE about Incoterms CIF? A.) Transfer of Risk occurs at the port of loading B.) The buyer enters into the contract of carriage with the main carrier C.) The seller pays unloading cost if separate from t he main carriage cost D.) The term can be used for all modes of transport
5.) Which of the following statements is correct w hen an assignment of proceeds has been effected under a documentary credit issued in accordance with UC P600? A.) The assignee must present complying documents to receive payment B.) The assignee will receive payment of the proceeds directly from the applicant C.) The value of the documentary credit is reduced by the amount of the assignment D.) The beneficiary has assigned its rights to the stated amount of proceeds to the assignee.
6.) A cumulative revolving documentary credit is opened with 9 months’ validity and allowing for USD70,000.00 to be drawn for each month. If only the first month’s shipment is effected in full, what is the available amount in the seventh month? A.) USD 0.00 B.) USD70,000.00 C.) USD420,000.00 D.) USD560,000.00
7.) A Pre – advice credit is an irrevocable undertaking: A.) To be irrevocable, operative cre dit must be issued B.) Operative credit to be issued with w ith amendments from pre-advice credit C.) False D.) Pre – advice is not acceptable in UCP 600. 3
8.) Which of the following is NOT an example of data conflict? A.) LC calls for men’s shirt; invoice show only shirt B.) LC calls for shipping mark ABC; BL shows shipping marks as container no. 123 C.) LC calls for to the order of ABC Bank as consignee; C ert. of Origin shows applicant D.) None
9.) A documentary credit is an irrevocable undertaking _ _ _ _ _ _ _ _ _ A.) Enforceable against a reimbursing bank even if issuing bank is unable to pay B.) Enforceable against the applicant even if issuing bank is unwilling to pay C.) Enforceable against the nominated bank even if issuing bank is unwilling to pay D.) Enforceable against the issuing bank even if the confirming bank is unwilling to pay
10.) An effective sales agreement must spec ify: I.) Commercial Documents required II.) It is subject to contract for international sale of goods III.) Point at which risks in respect of the goods pass from seller to buyer IV.) Requirements to obtain export/import clearance
Answer:
A.) B.) C.) D.)
I and II II and III III and IV I and III
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11.)Which 11.) Which of the following is NOT a reason for adapting open ac count terms? A.) Two companies have a long established trading relationship B.) Buyer wishes to engage the seller in long term relationship C.) Lesser banking fees D.) Seller is confident with the buyer’s country risk
12.) When a bank confirms an irrevocable transferable documentary cre dit, it assumes the credit risk of which party? A.) The applicant B.) The issuing bank C.) The first beneficiary D.) The second beneficiary 13.)Which 13.) Which of the following statement regarding Forfaiting is true ? I.) It is an arrangement 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
ANSWER:
A.) I and II B.) I and III C.) I, II and III D.) II, III and IV
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14.) A credit which states that “payments under the credit will be made only after the goods have been cleared through customs’ is a
A.) Credit with non-documentary condition B.) Inoperative Credit C.) Commercial Credit D.) Clean Credit
15.) If an applicant requests that the do cumentary credit expires at the counters of beneficiary’s bank and available with them by drafts drawn on issuing bank at 60 days after shipment date, how should the documentary credit be made available? A.) By Mixed Payment B.) By Deferred Payment C.) By Negotiation D.) By Acceptance
16.)Which 16.) Which of the following Incoterms is correctly desc ribed? Options
Incoterms
Insurance Document
Transport Document
A
DDP
Required
Marked Freight Paid
B
CFR
Required
Marked Freight Collect
C
FOB
Not Required
Marked Freight Paid
D
FAS
Not Required
Marked Freight Collect
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17.) A transferring bank confirms the master LC. Will the confirmation hold good for the t ransferred credit? What will be your answer in case of Back-to back Credit? Cre dit? A.) Confirmation holds good for both transferred credit and Back-to back LC B.) Confirmation holds good for transferred credit but not for Back-to back LC C.) Confirmation is not applicable for transferred credit but for Back-to back LC D.) Confirmation not applicable for both transferred credit and Back-to back LC 18.) A transferable credit can do which w hich of the following? A.) Protect the applicant from the risk r isk of loss and error B.) Allow the second beneficiary to obtain payment for complying documents C.) Restrict the right of second beneficiary to claim payment directly from the nominated bank D.) Permit the supplier to provide the intermediary trader with security of a documentary c redit
19.) Which of the following is NOT true about holder in due course? A.) Their rights are affected by disputes in rights and wrongs of the commercial contract B.) They acquire their right to claim payment through endorsement and delivery C.) They must have taken the instrument in good faith D.) They must have taken the instrument without the knowledge of any defects in title 20.)An 20.) An exporter based in New York has agreed to sell goods to a company in London. The importer is responsible for arranging freight and insurance. Which of the following shipping terms is correct? A.) CIF London B.) FAS London C.) CIF New York D.) FAS New York
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21.) Which of the following Incoterms can be used for Road/rail Shipment? I.)
CIF
II.)
FCA
III.)
DAT
IV.)
DAP
Options:
A.) I and II only B.) III only C.) II, III and IV only D.) IV only
22.) Which of the following incoterms is appropriate when the se ller is to bear all the risks and c osts including taxes and other duties at the quay at a named port of destination? A.) CIF B.) DDP C.) DAT D.) DAP
23.) An automatic non-cumulative revolving LC is issued for USD10,000.00 w ith the value of the LC being reinstated upon every shipment. The LC is valid for a period of one year. What is the maximum liability of the issuing bank? A.) USD10,000.00 B.) USD120,000.00
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C.) Cannot be determined D.) USD360,000.00
24.)Risk 24.) Risk of non-payment/default by the confirming bank is termed as ___________ ___________ risk. A.) Credit Risk B.) Issuing Bank Risk C.) Country Risk D.) Political Risk 25.) A credit which is available for a longer period and can be cancelled or amended only after giving a notice by the issuer to the beneficiary well in advance of expiry is known as: A.) Cumulative revolving Credit B.) Evergreen Credit C.) Inoperative Credit D.) Back to back Credit
26.)For 26.) For an instalment shipment, LC states, t here must be 20 days difference between two shipments. Which of the following will comply? A.) 1st Shipment on 01-01-2014 and 2nd on 21-01-2014 B.) 1st Shipment on 01-01-2014 and 2nd on 19-01-2014 C.) 1st Shipment on 01-01-2014 and 2nd on 20-01-2014 D.) 1st Shipment on 01-01-2014 and 2nd before 20-01-2014
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27.)ABC 27.) ABC Bank has received documents from its customer under a transferred LC. The customer confirms that they have an arrangement with be neficiary regarding forwarding documents directly to Issuing bank and provides them with a confirmation from 1 st beneficiary regarding the same and instructs ABC Bank to send documents directly to the issuing bank by-passing the transferring bank. Can ABC Bank accede to their customer’s request and send documents
directly to the issuing bank? A.) Yes, provided it is not a partial tr ansfer B.) Yes, since beneficiary themselves has agreed for the same C.) No, unless it is expressly agreed to by the transferring bank
28.) In accordance with UCP600, which of the following alterations can a first beneficiary request a transferring bank to make under a tr ansferable credit? A.) Extend the expiry date B.) Decrease the unit price C.) Decrease the insurance cover D.) Extend the period of shipment
29.)Documents 29.) Documents presented by the second beneficiary are credit compliant. The invoice substituted by First beneficiary is discrepant. Transferring bank approaches the beneficiary to rectify and beneficiary insists on sending the documents as it is on approval basis and furt her states that the applicant will definitely accept the document. Can a tr ansferring bank act on 1st beneficiary’s instructions as per UCP600? A.) Yes, since 1st beneficiary has got more control over the credit than the 2nd beneficiary, they can accede to the request
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B.) No, the transferring bank needs to present 2nd beneficiary’s document ignoring 1 st beneficiary’s request
C.) Transferring bank should check with Issuing bank regarding the same.
30.)Which 30.) Which of the following statements are true for a evergreen letter of credits? I.) They should be issued only for applicants of undoubted financial and de pendable undertaking II.) Issued only for Beneficiaries of undoubted financial and dependable undertaking III.) Liability remains outstanding for a long period IV.) They are always standby letter of cre dits
Answer:
A.) I and II B.) I and III C.) II and IV D.) I, II and III
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