Sample Q & A CDCS
Sample Q & A CDCS
Sample Q & A CDCS
A L/C with amount of 10000, Qty 1000 Pcs with CIF terms is transferred for an amount of 5000, Qty
1000 Pcs. What should be the minimum percentage of insurance cover required in the transferred credit?
A) 100%
B) 110%
C) 200%
D) 220%
3. A documentary credit is issued for USD 10000 on 01 Jan. The credit expires on 31 Oct The terms of
the credit state “This credit is revolving on a cumulative basis on the first of every month”. The following
drawing have taken place under the credit
15 Jan – USD 8000
15 Feb – USD 12000
15 April – USD 10000
15 June – USD 15000
What is the balance available under the Credit as of 01 July ?
A) 25,000
B) 10,000
C) 35,000
D) 15,000
Invoice Details
Goods Value : 10,000
Less Discount : 1,000
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Total 9,000
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5. Which of the following presentations will be acceptable under a L/C which prohibits partial shipments?
A) Two bills of lading showing shipment from the same port of loading on the same vessel to different
ports of discharge
B) Three Air Waybills showing shipment from the same air port on three different flights to the same
destination
C) Three Railway Receipts showing shipment on three different wagons of the same train
D) Two Courier receipts issued by the same courier company issued on two consecutive days
6. Bank A issues a letter of credit and nominates Bank B as the negotiating bank. When does Bank B
assume the credit risk of Bank A ?
A) When Bank B agrees with the beneficiary to negotiate document
B) When Bank B negotiates documents under the L/C
C) When Bank A issues the L/C nominating Bank B as the negotiating bank
D) When the L/C is received by the beneficiary
E) Consider the following.
LC Condition :
Field 46A: Documents Required
+ Commercial Invoice in 2 Originals
+Packing List in 2 Originals
+Bill of Lading consigned and notify the Applicant marked Freight Prepaid
Beneficiary presented the documents and no mention was made of the age of the Vessel.
Nominated Bank should
7. Applicant requires you to issue a Documentary Credit requiring shipment from Seller’s Warehouse in
Hongkong to Buyer’s Warehouse in China. Documents required by the Credit are (a) Signed Invoice in 3
Originals, (b) Cargo receipt by Applicant’s forwarder in Hongkong. Which of the following
INCOTERMS best suit this kind of a Credit ?
A) DDP
B) EXW
C) FOB
D) CIP
8. A nominated bank negotiates the beneficiary’s documents against their indemnity in respect of certain
discrepancies. They forward the documents to the issuing bank for payment. Which of the following
statements are true
A) Nominated bank is obliged to list the discrepancies on their schedule
B) Issuing bank is obliged to seek applicant’s waiver of discrepancies
C) Issuing bank is obliged to send a notice of rejection if they are not prepared to pay.
D) All of the above
10. Forfaiting means with-recourse purchase of export receivables by banks or financial institutions. What
is wrong with this statement?
A) With-recourse
B) Purchase
C) Export
D) Receivables
11. Under a payment by negotiation, how can the seller obtain immediate payment?
A) By requesting immediate payment in exchange for a sight bill of exchange
B) By negotiating a discounted price for a bill of exchange
C) By negotiating with IB to use the deliverable goods as collateral for a cash loan
12. When using letters of credit in international trade, which of the following would NOT be desirable
from a seller's point of view?
13.In a back-to-back letter of credit, which of the following CANNOT differ between the two letters of
credit?
A) The name of the beneficiary
B) The Expiry date
C) The list of underlying transport documents
14. Under a receipt and undertaking letter of credit, to whom is a loan extended, and under what
condition?
A) Seller against a receipt and undertaking signed by the buyer
B) Buyer against a receipt and undertaking signed by the seller
C) Seller against a receipt and undertaking signed by the seller
15. Which of the following clauses or notations appearing on the face of the Transport Document would
preclude it from being accepted ?
A) Oil drums are leaking
B) Highly flammable material
C) Potentially explosive material
D) Refrigerated seafood, may spoil during voyage
16. An insurance document is presented under a documentary credit showing sum assured as USD10,000.
A loss is incurred for a value of USD1,500. Which of the following statements is FALSE ?
1. If the insurance is marked 10% franchise, claims payable will be USD1,500
2. If the insurance is marked 10% excess deductible, claims payable will be USD500
3. If the insurance is marked irrespective of percentage, claims payable will be USD1,500
4. If the insurance is marked irrespective of percentage, claims payable will be USD10,000
A. 1, 2, 3 & 4
B. 3 & 4
C. 4 only
D. 2, 3 & 4
17.The issuing and reimbursing bank have a 2-day pre-debit arrangement. The reimbursing bank receives
a claim on 16-May (Fri). What is the LATEST date by which the claim should be processed? (Saturday
and Sunday are not banking days)
A. 19-May
B. 21-May
C. 23-May
D. None of the above
18. If a “Bank-to-Bank Reimbursement” is under URR, the I/B has to indicate that the same in:
A. Reimbursement Authorization
B. Letter of Credit
C. Reimbursement Amendment
D. Both A and B
20. AA, New York(Reimbursing Bank) receives a MT742 on 01Oct09(Friday) with value
01Oct09. Latest by which date AA, NY should process the claim? (AA, NY has its weekly holidays on
Sat and Sunday)
A. 01Oct 09
B. 04Oct 09
C. 06Oct 09
D. 07Oct 09
E. 08Oct 09
21.The issuing bank issues the L/C via MT700. It should send the reimbursement authorization via
A. Signed Letter
B. MT740
C. Any of the above.
22. The reimbursement authorization shows the latest presentation day as 10 Oct 09. The Reimbursing
bank receives a claim on12 Oct 09. Can it honour the claim?
A. Yes
B. No
23. As per the reimbursement authorization, all charges are for the account of the issuing bank. The
reimbursing bank honours a reimbursement claim of $10,000.00, remits $100.00 as charges claimed by
the claiming bank and reimbursing banks charges is $200.00. How much the issuing bank should pay the
reimbursing bank:
A) $10,000.00
B) $10,200.00
C) $10,100.00
D) $10,300.00
24. A Documentary Credit stipulates ‘Shipment to be made immediately’. Which of the following
statements is applicable?
25.Presentation of multiple transport documents will not be considered as partial shipments, if?
26.If the credit calls for a courier receipt marked freight prepaid, banks will accept a courier receipt
A) which appears to be dated in the place from which the credit stipulates the goods are to be shipped
B) which mentions freight charges is payable by a party other than the consignee
C) issued by an expedited delivery service
D) all of the above
27 ABC Co. has entered into a contract with XYZ Ltd to ship Iron Ore from Chennai to Busan. The
incoterms specified in the contract is CFR Busan. ABC Co’s mine is located 100 kms from Chennai and
ABC Co plans to transport the goods from its mine to the port by Trucks. Which of the following
statement correctly reflects the risks & responsibilities of ABC Co & XYZ Ltd?
a. Risk of loss / damage to the goods after they are loaded on the trucks is for XYZ Ltd’s account.
b. Risk of loss / damage to the goods till the vessel reaches Busan is for ABC Co’s account
c. Risk of loss / damage to the goods while they are being unloaded in Busan is for the account of XYZ
Ltd
d. XYZ Ltd is responsible for arranging the vessel if the shipment is to be effected by charter party.
28. Your customer has approached a manufacturer to buy 1000 pairs of shoes, the various prices quoted
by the manufacturer are as follows
EXW – 10000
FOB – 10500
CIF – 11500
DDP – 13000
Your customer has checked independently and received the following quotes for the same shipment they
are
All licensing and loading costs (in exporting country) – USD 500
Main Carriage cost – USD 1000
Minimum insurance cover – USD 500
Unloading costs, inland transport (in importer’s country) and import duties – USD 1500
a) EXW
b) FOB
c) CIF
d) DDP
29.You bank has issued a letter of credit with the following condition in field 46A
Certificate of origin issued by a chamber of commerce.
Which of the following certificate of origin will be acceptable under the credit?
a) C/O issued on the letter-head of the chamber of commerce and signed by the chamber of commerce
b) C/O is issued in a blank form (no letterhead), signed by the beneficiary and countersigned by chamber
of commerce.
c) C/O issued on the letter head of the beneficiary, signed by the beneficiary and countersigned by the
chamber of commerce
d) C/O issued by the government of the beneficiary’s country on their letter head and countersigned by
the chamber of commerce.
1) A Only
2) A & B
3) A, B & C
4) A, B, & D
30. Beneficiary made a presentation under a documentary credit, with the following terms
Partial shipments not allowed
Shipment from China
Quantity – 100000 Mts
Tenor – 30 days after shipment
Presentation period – 10 days after shipment
Latest shipment date – 10th March
The presentation consisted of three party bills of lading showing details as follows
B/L no. 1 - 35, 000 Mts – Port of discharge: Chennai
On board the vessel FeederV.1A on 01 March at Shekou, China
On board the vessel Voyager V. 2 on 12 March at Shanghai, China
B/L no. 2 – 35, 000 Mts – Port of discharge: Chennai
On board the vessel Feeder V.1A on 03 March at Chiwan, China
On board the vessel Voyager V.2 on 12 March at Shanghai, China
B/L no. 3 - 35, 000 Mts – Port of discharge: Chennai
On board the vessel Feeder V.1A on 06 March at Mawan, China
On board the vessel Voyager V.2 on 12 March at Shanghai, China
i) A & D
ii) B Only
iii) B & C
iv) C Only
33. Bank I issued an irrevocable documentary credit available with Bank N by negotiation against
presentation of conforming documents. However Bank I receives documents from Bank B stating that all
terms and conditions are complied with and they have negotiated documents. Which of the following
statements BEST describe the options available to Bank I?
A) Examine documents, if they are compliant pay Bank B
B) Examine documents, if they are compliant pay Bank N
C) Return documents to Bank B stating they are not authorized to negotiate
D) Send documents to Bank N for negotiation
35A documentary credit allowing partial shipment is issued with the following shipment schedule.
Which of the following shipments made by the beneficiary under the L/C is acceptable?
i) A & B
ii) B & C
iii) A & D
iv) C & D