Specimen Paper 2014 - FINAL

Certificate in International Trade and Finance (CITF®)
Specimen paper: A
Length of examination: 2 hours
Instructions to learners
1. Open this question paper when instructed to do so.
2. Answer all questions.
3. Use the examination answer sheets provided for your answers. Please do not note
your answers in this booklet, as they will not be recorded.
4. Read the instructions on both sides of the answer sheet carefully.
5. Before you leave the examination room you must hand in all the examination
materials including the answer sheet and question paper and have them checked by
the invigilator. Failure to do so will invalidate your entry.
Information for learners
1. This paper consists of two sections:
Section A: 80 stand-alone multiple-choice questions worth one mark each.

Section B: 4 case studies each with 5 related multiple-choice questions. Each
question is worth 1 mark.
2. Basic silent desktop calculators with + - x / % and memory functions are allowed.
Scientific or programmable calculators or calculators with any additional functions
are not allowed.
ifs University College is a registered charity, incorporated by Royal Charter.
The International Chamber of Commerce (ICC) is the largest, most representative business organization in the world.
Certificate in International Trade and Finance Specimen Paper A
Section A
1. The World Trade Organization is primarily concerned with:
A international contract law.
B providing international trade finance.
C lowering of trade barriers.
D regulating international payments.
2. Which of the following is not one of the main activities undertaken by the International
Chamber of Commerce?
A Dispute resolution.
B Issuance of certificates of origin.
C Policy advocacy.
D Rule setting.
3. What is the biggest risk for an exporter selling to a country that has a volatile inflation rate?
A Economic risk.
B Environmental risk.
C Exchange risk.
D Political risk.
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© ifs University College 2014
Certificate in International Trade and Finance Specimen Paper
4. A status enquiry on a potential overseas trading partner will usually provide an exporter
with:
A a forecast of earnings growth.
B competitive edge.
C confidential information.
D historical data.
5. Which of the following is a credit rating agency?
A AIG.
B Atradius.
C Aviva.
D Standard and Poor's.
6. Which of the following is true in respect of the advising, nominated and confirming bank in
a letter of credit?
A One bank may assume all three roles and responsibilities.
B The applicant must bank with all three institutions.
C The beneficiary must agree which banks are used.
D To avoid conflicts of interest, separate banks must perform each role.
7. An arrangement in which one manufacturer will agree to distribute a second overseas

firm’s products or services is known as:
A co-marketing.
B franchising.
C joint venture.
D partnership.
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8. The granting of intellectual property rights to an overseas manufacturer in exchange for a

fee is known as:
A franchising.
B indirect selling.
C licensing.
D networking.
9. The contract terms are 'FCA Gatwick Airport'. Which of the following transport documents
would be acceptable to an importer?
A Air waybill, marked ‘freight collect’.
B Air waybill, marked ‘freight paid’.
C Bill of lading marked ‘freight paid’.
D Bill of lading marked ‘freight payable at destination’.
10. Country A imposes economic sanctions against Country B when the latter carries out
unauthorised nuclear testing. Your company, which is based in Country A, trades regularly
with Country B. This represents:
A environmental risk.
B social risk.
C political risk.
D technological risk.
11. Which one of the following is not one of the three recognized phases of money
laundering?
A Integration.
B Layering.
C Obfuscation.
D Placement.
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12. A pro forma invoice received by a seller from a buyer is:
A a contractual offer.
B a valid contract.
C an acceptance of terms.
D an invitation to tender.
13. Which of the following is true of both collections and letters of credit?
They both:
A are irrevocable instruments.
B give assurance that the goods will be safe during shipment.
C guarantee payment.
D provide a basis for exchanging documents for payment.
14. A documentary credit is issued on behalf of the:
A seller.
B buyer.
C seller’s bank.
D buyer’s bank.
15. Which of the following must apply for the beneficiary to be assured of payment under a
letter of credit?
A All documents submitted must comply with the credit.
B The beneficiary must have an account with the issuing bank.
C The goods must be of merchantable quality.
D The terms of the underlying contract must be met.
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16. Documents which are presented under a letter of credit but do not conform to the terms
are known as:
A discrepant.
B invalid.
C unconfirmed.
D unacceptable.
17. Unless otherwise stated in the letter of credit, beneficiaries should normally present
documents under a letter of credit how many calendar days after shipment?
A 10.
B 14.
C 21.
D 30.
18. Which of the following types of letter of credit would be the most appropriate for a
contract that involves numerous and regular shipments?
A Back-to-back.
B Red clause.
C Revolving.
D Transferable.
19. Which of the following parties can never add their confirmation to a letter of credit?
The:
A advising bank.
B negotiating bank.
C issuing bank.
D nominated bank.
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20. Which of the following is not a recognised role for a bank involved in a documentary credit
transaction?
A Advising bank.
B Conforming bank.
C Reimbursing bank.
D Transferring bank.
21. Which of the following is not a characteristic of both a bank payment obligation subject to
URBPO and a documentary credit subject to UCP 600?
A independent from the underlying sales contract.
B irrevocable.
C issued in favour of a bank.
D subject to an expiry date.
22. Negotiation of documents presented under a documentary credit can result in the
nominated bank:
A accepting drafts drawn on it by the beneficiary.
B honouring documents if the credit is payable at sight.
C incurring a deferred payment undertaking.
D purchasing drafts drawn on the issuing bank by the beneficiary.
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23. Which of the following will be established before documents are honoured or negotiated
under a documentary credit?
That the:
A documents are genuine and have not been falsified.
B documents required by the credit match those required by the contract terms.
C goods delivered meet the terms of the contract.
D invoice is in the same currency as the credit.
24. A documentary credit that is expressed to be revocable:
A can be cancelled at any time by the applicant.
B is issued by the buyer in their own right rather than by an issuing bank.
C is not recognised as a credit under the UCP 600 rules.
D will only become payable if the underlying contract is revoked.
25. A bill of exchange, presented under a collection, has been accepted. What should the
collecting bank do after advising the remitting bank of acceptance?
A Forward the bill to the exporter.
B Hold the bill until the due date for payment.
C Return the bill to the importer.
D Send the bill to the exchange control authorities.
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26. ISP98 states that in the event of dishonour, timely notice must be given. In this context
more than:
A 24 hours is unreasonable.
B 48 hours is unreasonable.
C 3 days is unreasonable.
D 7 days is unreasonable.
27. Which of the following parties would normally be the beneficiary of a standby letter of
credit?
A Debtor’s bank.
B Creditor.
C Debtor.
D Creditor’s bank.
28. Under ISP98, a standby letter of credit must be:
A discountable.
B forfaitable.
C irrevocable.
D negotiable.
29. A standby letter of credit cannot be amended or cancelled by the issuer without the
consent of the beneficiary. Under ISP98 this describes:
A enforceability.
B giving undertakings.
C irrevocability.
D workability.
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30. A demand guarantee that does not state the basis on which it has been issued will:
A be automatically subject to URDG 758.
B be automatically subject to ISP98.
C be subject to the local laws and practices.
D not be valid.
31. Company A contracts with Company B to build a bridge for Company B. Company B
requires a guarantee from its own bank as security. Under URDG 758, who is the
guarantor?
A Company A.
B Company B.
C Company A’s bankers.
D Company B’s bankers.
32. On-demand guarantees can provide an alternative method of obtaining payment should
funds not be forthcoming under the contract. Which of the following is not normally
associated with this type of guarantee?
A A demand statement from the beneficiary.
B A law and jurisdiction clause.
C An expiry date.
D An undertaking to repay funds should the claim later be proved to be unjustified.
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33. Documents are presented to a nominated bank on the morning of Tuesday 29 May.
Applying the maximum number of banking days allowed under UCP 600 for that bank to
determine if a presentation is compliant, what is the latest date on which the beneficiary
can be notified of any discrepancies?
A Thursday 31 May.
B Friday 1 June.
C Monday 4 June.
D Tuesday 5 June.
34. Which of the following statements is correct when applied to a clean collection subject to
URC 522? Partial payment:
A may be accepted provided it is not prevented by reason of law.
B may never be accepted.
C may only be accepted if specifically authorised in the collection instruction.
D is always acceptable.
35. The bank payment obligation has been developed to give an additional level of security to
companies selling on which of the following terms?
A Clean collection.
B Documentary collection.
C Documentary credit.
D Open account.
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36. In accordance with UCP 600, a transferable letter of credit may not be transferred:
A by a second beneficiary to its supplier.
B for less than the full value of the credit.
C to more than one second beneficiary.
D without the prior agreement of the applicant and the issuing bank.
37. Invoice discounting and factoring for exporters are usually described as:
A bill finance.
B creditor finance.
C debtor finance.
D produce finance.
38. The trade cycle is financed through:
A capital expenditure.
B equity.
C mezzanine finance.
D working capital.
39. ‘Whole turnover’ export insurance cover usually indemnifies exporters against between:
A 60–90% of the loss.
B 70–100% of the loss.
C 75–95% of the loss.
D 85–95% of the loss.
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40. Coface is a government organisation that specialises in:
A export insurance.
B import logistics.
C money laundering detection.
D trade legislation.
41. Which of the following is not a recognised method of managing foreign exchange
exposure?
Using:
A forward contracts.
B factoring.
C options.
D premiums.
42. An advantage for an exporter when utilising a factoring facility is that the:
A exporter can choose which debtors to include in the facility.
B exporter will always perform its own credit control.
C exporter will save time and cost through use of the factor’s credit control systems.
D factor company can deal with queries relating to the underlying goods.
43. In a currency option, the agreed rate is known as the:
A conversion rate.
B exchange rate.
C option price.
D strike price.
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44. The main risk for the discounter of ‘without recourse’ invoice finance is:
A credit risk.
B non-acceptance risk.
C non-performance risk.
D transit risk.
45. An arrangement under which a financing company takes over the whole administration and
credit control of a company’s sales ledger is known as:
A buyer credit.
B factoring.
C forfaiting.
D invoice discounting.
46. Which of the following actions under a documentary credit would be incompatible with
Islamic finance?
A Acceptance of a draft.
B Issuance of a deferred payment undertaking.
C Negotiation of documents.
D Payment at sight.
47. Which of the following is not a component of a documentary credit issued to reflect the
Islamic finance structures of murabaha?
A A promise to purchase agreement.
B A requirement for documents to be issued in the name of the Islamic bank.
C A separate arrangement for sale of the goods from the Islamic bank to the buyer.
D Delivery of the goods to the Islamic bank.
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48. A committed overdraft facility can also be described as a:
A confirmed line of credit.
B import or export loan facility.
C revolving credit facility.
D without recourse invoice discounting facility.
49. Where a business has regular flows, both in and out, of the same currency, which of the
following products would be most suited to managing the exchange risk?
A Currency account.
B Currency option.
C Forward contract.
D Futures contract.
50. When using hard currencies, ‘spot’ transactions are generally settled by the bank within
how many business days?
A Two.
B Three.
C Four.
D Five.
51. Which of the following products cannot be used to ‘hedge’ exchange rate risk?
A Credit insurance.
B Currency account.
C Currency option.
D Forward contract.
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52. Credit insurance from a government-backed agency will typically cover all of the following
except:
A buyer insolvency.
B changes to statute in the buyers country.
C natural disasters.
D product liability.
53. Which of the following best describes a method of finance for the beneficiary of a
documentary credit?
A Acceptance of a draft.
B Incurring a deferred payment obligation.
C Negotiation.
D Payment at sight.
54. Islamic financing that may involve assets not yet in existence and of which the seller does
not have ownership is based on which of the following structures?
A Gharar.
B Murabaha.
C Musharaka.
D Salam.
55. Factoring will normally only involve goods shipped with payment:
A against a documentary credit.
B in advance.
C on open account terms.
D under a documentary collection.
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56. When entering an option forward exchange contract with a bank, the client is able to:
A change the currency amounts before the contract matures.
B deal under the contract between specified dates.
C decide which currencies to deal in on the due date.
D walk away from the contract if spot rates improve in their favour.
57. A company has entered into a forward exchange contract to sell USD30,000 in exchange
for GBP on a specified date. At maturity the company is unable to complete the contract,
which is then closed out. The actions taken by its bank will be to sell the customer
USD30,000 at the:
A forward contract rate, repurchase USD30,000 at the forward contract rate and apply
a previously agreed financial penalty to the customer account.
B forward contract rate and repurchase USD30,000 at the spot rate.
C spot rate and repurchase USD30,000 at the forward contract rate.
D spot rate, repurchase USD30,000 at the spot rate and apply a previously agreed
financial penalty to the customer account.
58. Documentary credits that are issued to reflect the Islamic principles of musharaka will not
generally involve:
A buying goods with the objective of selling them at a higher price.
B payment for underlying goods on a sight basis.
C sale of goods on a deferred payment or instalment basis.
D the issuing bank and the applicant putting up capital to finance the transaction in
equal proportions.
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59. In both supplier and buyer credit facilities, a support agreement can be best described as:
A a counter-guarantee issued by the borrower’s bank underwriting the loan made.
B a government agency’s guarantee to the lending bank for principal and interest.
C documentation that gives the lending bank a lien over the assets of the borrower.
D the lending bank’s commitment to finance the underlying transaction.
60. Foreign currency exposure can usually be categorised into all of the following types
except:
A economic exposure.
B insurance exposure.
C transaction exposure.
D translation exposure.
61. An accepted bill of exchange is held by the bank. What course of action is always
appropriate for the bank to take?
A Discount the bill if payment is refused at maturity.
B Negotiate the bill if payment is refused at maturity.
C Present the bill promptly for payment at maturity.
D Protest the bill if payment is refused at maturity.
62. Which of the following accurately reflects the characteristics of a bill of exchange?
A A conditional order in writing.
B A conditional order in writing for a sum certain in money.
C An unconditional order in writing for a sum certain in money.
D An unconditional order in writing payable in the future.
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63. Which of the following is an example of a financial document?
A Bill of lading.
B Bill of sale.
C Commercial invoice.
D Promissory note.
64. Bills of exchange can be drawn payable at a fixed or determinable future date. Which of
the following would not be acceptable?
A bill of exchange drawn at:
A 30 days’ date.
B 45 days after 24 June.
C 60 days after arrival of vessel.
D 90 days after sight.
65. A bill of exchange or draft is associated with all of the following types of documentary
credit except for credits available by:
A acceptance.
B deferred payment.
C negotiation.
D sight payment.
66. Which of the following is not a commercial document?
A A bill of exchange.
B A certificate of origin.
C A packing list.
D An invoice.
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67. Which of the following is a document of title?
A Air waybill.
B Bill of lading.
C Non-negotiable sea waybill.
D Rail waybill.
68. A certificate of origin that reflects imports into the European Union from countries with
preferential access is known as:
A ATR1.
B certificate of value and origin (CVO).
C EUR1.
D GSP Form A.
69. A consular invoice is normally signed by:
A a chamber of commerce in the exporting country.
B a chamber of commerce in the importing country.
C an embassy official in the exporting country.
D an embassy official in the importing country.
70. Which of the following parties is not an agency that specialises in third-party inspection of
goods?
A Bureau Veritas.
B Cotecna.
C Dun & Bradstreet.
D Intertek.
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71. A missing original bill of lading puts the importer at risk because the:
A holder of the missing bill may present it to the shipping line and collect the goods.
B importer will be unable to raise finance without a full set of bills of lading.
C importer will have to pay for the goods without being able to collect them.
D importer's bank will automatically charge for the cost of the goods and an indemnity.
72. A full set of clean on-board bills of lading will be required, from the exporter, for which of
the following Incoterms® 2010?
A Ex Works.
B FAS.
C FCA a named place.
D FOB.
73. Which of the following is a transport document?
A CMR.
B Export licence.
C FCA.
D Promissory note.
74. Bills of lading are usually issued in sets of how many originals?
A One.
B Two.
C Three.
D Four.
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75. Which of the following statements are true of Air Waybills?
1. They are quasi-negotiable.

2. Describe the goods and contain a contract of carriage.
3. Evidence title of the goods.
4. The carrier or their agent issues them.
A 1 and 2 only.
B 1 and 3 only.
C 2 and 4 only.
D 3 and 4 only.
76. A buyer wishes to avoid the risk of incurring demurrage costs for goods shipped on a short
sea journey. Which of the following transport documents will best suit those requirements?
A Bill of lading.
B Charter party bill of lading.
C Liner bill of lading.
D Non-negotiable sea waybill.
77. The ICC International Court of Arbitration requires an initial response to its approach to the
party from which resolution has been sought within:
A 30 days.
B 45 days.
C 60 days.
D 90 days.
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78. Which of the following statements regarding sanctions is true?
A ICC rules, such as UCP 600, overrule sanctions.
B Shipping via countries subject to sanctions could result in a breach of those

sanctions.
C Sanctions can only be applied to organisations and countries not individuals.
D SWIFT was designed specifically to screen for organisations on the UN terrorist

financing list.
79. The financial action task force’s recommendations cover which of the following?
A Terrorist financing only.
B Money laundering only.
C Terrorist financing and money laundering.
D International trade disputes and arbitration.
80. Which of the following has signed up to the UN Convention on Contracts for the
International Sale of Goods agreement?
A India.
B South Africa.
C United Kingdom.
D United States of America.
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Section B
Case Study 1
KCL Construction (UK) Ltd is considering entering into a competitive tender process for the
supply of blades for a wind farm project in Sweden. The contract is in US dollars and is
structured so that:
• 20% is paid in advance by the buyer within two months after any contract has been signed;
• 20% is payable 60 days after shipment;
• 20% is payable 90 days after shipment;
• 20% is payable 120 days after shipment; and
• 20% is to be retained for a period not to exceed 18 months after shipment or 12 months after
on-site testing, whichever is the sooner.
If the contract is awarded, the initial payment received will be used to make payments to
component suppliers in the UK and will require conversion into pounds sterling.
81. The company has decided to cover the exchange risk for the initial payment that will arise
should the contract be awarded by entering into a pure currency option. Which of the
following correctly describes the type of option they will require to sell a fixed amount of US
Dollars for Pounds Sterling at any date prior to its maturity date?
A A European call option.
B A European put option.
C An American call option.
D An American put option.
82. As part of the tender process, KCL Construction (UK) Ltd is required to submit a bid bond
in support of its tender which is to be issued in a standard format by a bank in Sweden. If
the overall contract value is USD 2,000,000, which of the values stated below will fall
within the typical range for the value of a tender guarantee?
A USD 20,000 or less.
B USD 60,000.
C USD 120,000.
D USD 150,000 or more.
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83. The buyer has stated that the payments due at staged intervals of 60, 90 and 120 days
after shipment will be managed through a documentary credit. KCL Construction (UK) Ltd
will require immediate access to these funds. How could the credit be best constructed to
achieve this? Available with:
A any bank by acceptance.
B the advising bank by acceptance.
C the confirming bank by acceptance.
D the issuing bank by acceptance.
84. KCL Construction (UK) Ltd has been advised that the terms of trade will be CFR to a
Swedish port. Which of the following best describes that Incoterm® 2010 arrangement?
The seller will usually be responsible for insuring the goods until:
A arrival in Sweden, and the delivery risk for the goods passes to the buyer upon arrival
in Sweden. Cost of freight will be paid by the seller up to the port of discharge.
B arrival in Sweden, and the delivery risk for the goods passes to the buyer when the
goods are loaded on board a vessel at the port of loading. Cost of freight will be paid
by the seller up to the port of discharge.
C they are on board the vessel at the port of loading, and the delivery risk for the goods
passes to the buyer upon arrival in Sweden. Cost of freight will be paid by the seller
up to the port of discharge.
D they are on board the vessel at the port of loading, and the delivery risk for the goods
passes to the buyer when the goods are loaded on board a vessel at the port of
loading. Cost of freight will be paid by the seller up to the port of discharge.
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85. During preliminary discussions with the buyer, KCL Construction (UK) Ltd has been
assured that should the wind turbines operate as expected, then the monies due to be paid
at the end of the contract term could be paid in advance of this date, provided that a
guarantee has been issued in KLC Construction’s favour. This type of guarantee is best
described as:
A a performance guarantee.
B a retention monies guarantee.
C a trade debt guarantee.
D an advance payment guarantee.
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Case Study 2 begins on page 28.
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Case Study 2
RFT Solutions Ltd has developed portable solar-powered technology units that it believes will
revolutionise the lives of people living in remote communities who have no access to electricity.
Interest in the product is high and they is looking for a quick route to market in countries with
which it has no previous trading experience. A number of these countries have weak economies
and access to foreign exchange is severely restricted, so RFT Solutions Ltd needs to look for
innovative solutions that will enable it to establish trading relationships.
86. RFT Solutions Ltd is keen to consider appointing a local distributor to act on their behalf. A
distributor will not usually:
A manufacture the goods locally.
B provide after sales support.
C purchase the goods outright.
D set the selling price of the goods.
87. A government official in one of the countries targeted by RFT Solutions Ltd has advised
that foreign exchange approval for transactions will be granted provided it is prepared to
enter into a binding counter-purchase agreement. Such an arrangement would result in:
A a barter agreement being entered into, with an agreed cash balance being paid to
RFT Solutions Ltd.
B the insertion of a buyback clause into the contract, resulting in RFT Solutions Ltd
making a counter-payment for any goods that remain unsold by the buyer.
C the value of the goods sold by RFT Solutions Ltd being paid for in full, with a counter-
contract being signed to buy unrelated goods produced within that country.
D the value of the goods sold by RFT Solutions Ltd being paid for in part by the
proceeds raised by the sale of unrelated goods back to RFT Solutions Ltd.
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88. RFT Solutions Ltd’s local agent has been holding discussions with a number of local
manufacturers in the region with a view to establishing a co-operative agreement. The
agreement would give easier access to that market and other neighbouring countries
through the establishment of a new legal entity in the region thereby giving RFT Solutions
Ltd a local manufacturing presence. This form of agreement is known as:
A a joint venture.
B an indirect export agreement.
C direct outsourcing.
D franchising.
89. RFT Solutions Ltd’s preference is to retain control of the manufacture of the goods and
agree individual contracts with buyers in each of its target markets. Given the weak state
of the economies of the countries with which it is looking to trade, which of the following
products should it insist upon as an essential part of any contract?
A Clean collection.
B Confirmed documentary credit.
C Documentary credit.
D Performance guarantee.
90. RFT Solutions Ltd is also considering insuring against the risk of non-payment through
government-backed insurance schemes. Such schemes will generally not cover:
A buyer insolvency.
B damage or loss of goods in transit.
C a moratorium placed on contractual payments.
D natural disasters that prevent performance.
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Case Study 3
TSV Automotive Ltd has been successfully exporting to customers in Europe and North America
for a number of years and has well-established relationships with a number of key clients.
Traditionally, it has always insisted on payments either being made in advance or against a
confirmed documentary credit issued in its favour. The company remains risk averse but is
looking for ways to reduce costs.
91. An option that has been suggested by one of its clients is for the issue of a standby letter
of credit in its favour. Which of the following best describes a standby letter of credit?
An undertaking from a bank:
A to issue a letter of credit when requested.
B to make payment against documents that evidence shipment of goods.
C that payment will be made against documents that evidence default with the terms of
the underlying contract.
D that it will guarantee to remedy any contractual breach that occurs through the
actions of its client.
92. Which of the following products most closely relates to the purpose that a standby letter of
credit fulfils?
A Bank guarantee.
B Confirmed documentary credit.
C Documentary letter of credit.
D Trade finance facility.
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93. TSV Automotive Ltd has agreed to accept a standby letter of credit from one of its clients
which will then be used to support more relaxed trade terms. With which of the following
combinations of trade terms are standby letters of credit most likely to be associated?
A Advance payments and documentary collections.
B Advance payments and open account trading.
C Documentary credits and documentary collections.
D Open account trading and documentary collections.
94. TSV Automotive Ltd has come to you for clarification of a number of common
misconceptions about standby letters of credit. Which of the following statements is
correct?
Standby letters of credit:
A can be revoked by the issuing bank upon presentation by the applicant of proof of
contractual performance issued by an independent assessor.
B cannot be amended as they are default instruments.
C cannot be confirmed as the obligation to pay is solely that of the issuing bank.
D that do not specify any required document will still require a documentary demand for
payment to be presented.
95. TSV Automotive Ltd had previously relaxed its trading terms with a known client, only to
then have problems in obtaining settlement from the client, which claimed that TSV
Automotive Ltd had not delivered goods in compliance with the terms of the credit.
A standby letter of credit offers protection against this. Payment under the standby is
subject to:
A any knowledge the issuer may have about a breach of contract.
B the beneficiary’s ability to make a timely presentation under the standby.
C the beneficiary’s right to obtain payment from the applicant.
D the issuer’s right or ability to obtain reimbursement from the applicant.
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Case Study 4
Touche Clothing Company Ltd has established itself as a major designer label for fashion-
conscious teenagers in the UK and has recently begun exporting its clothing range to Streetside
Kidz, a chain of upmarket clothing retailers in Canada.
96. Touche Clothing Company Ltd terms for payment are 90 days after shipment on a
documents against acceptance basis. This terminology is most often associated with:
A documentary collections.
B documentary credits.
C forfaiting.
D open account trading.
97. Touche Clothing Company Ltd requires an additional form of payment guarantee to be
given by the bankers of Streetside Kidz before the underlying documentation is released.
This is often referred to as:
A avalisation.
B confirmation.
C factorisation.
D secondary acceptance.
98. Touche Clothing Company Ltd dispatch the goods by road from its premises to the port in
the UK nominated by the buyer who will then arrange for the goods to be dispatched by
sea to Toronto port. The transport document that Touche Clothing Company Ltd will be
most likely to receive is a:
A bill of lading.
B multimodal transport document.
C non-negotiable sea waybill.
D road transport document.
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99. Touche Clothing Company Ltd will discharge its delivery obligations by delivery of the
goods to the named port and loading on a vessel. The Incoterm that will apply in these
circumstances is:
A DAT.
B FAS.
C FCA.
D FOB.
100. The contract signed between Touche Clothing Company Ltd and Streetside Kidz requires
all goods to be available for shipment within 30 days after an order has been placed.
Production issues delayed the completion of the latest order and consequently Touche
Clothing Company Ltd is contractually obliged to ship the goods at its expense to Toronto
airport and insure the goods to that point.
From the information given, the Incoterm that is most likely to apply in these circumstances
is:
A CIF.
B CIP.
C DAP.
D DDU.
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What are the main risks involved in international trade?

What are the main risks involved in international trade?

What documents are typically used for shipment of goods by sea?

What documents are typically used for shipment of goods by sea?

Certificate in International Trade and Finance (CITF®)

1. Open this question paper when instructed to do so.

2. Answer all questions.

4. Read the instructions on both sides of the answer sheet carefully.

Information for learners

1. This paper consists of two sections:

Section A: 80 stand-alone multiple-choice questions worth one mark each.

ifs University College is a registered charity, incorporated by Royal Charter.

1. The World Trade Organization is primarily concerned with:

A international contract law.

B providing international trade finance.

C lowering of trade barriers.

D regulating international payments.

B Issuance of certificates of origin.

A a forecast of earnings growth.

5. Which of the following is a credit rating agency?

D Standard and Poor's.

A One bank may assume all three roles and responsibilities.

B The applicant must bank with all three institutions.

C The beneficiary must agree which banks are used.

D To avoid conflicts of interest, separate banks must perform each role.

7. An arrangement in which one manufacturer will agree to distribute a second overseas

8. The granting of intellectual property rights to an overseas manufacturer in exchange for a

A Air waybill, marked ‘freight collect’.

B Air waybill, marked ‘freight paid’.

C Bill of lading marked ‘freight paid’.

D Bill of lading marked ‘freight payable at destination’.

12. A pro forma invoice received by a seller from a buyer is:

A are irrevocable instruments.

B give assurance that the goods will be safe during shipment.

D provide a basis for exchanging documents for payment.

14. A documentary credit is issued on behalf of the:

A All documents submitted must comply with the credit.

B The beneficiary must have an account with the issuing bank.

C The goods must be of merchantable quality.

D The terms of the underlying contract must be met.

A independent from the underlying sales contract.

C issued in favour of a bank.

D subject to an expiry date.

A accepting drafts drawn on it by the beneficiary.

B honouring documents if the credit is payable at sight.

C incurring a deferred payment undertaking.

D purchasing drafts drawn on the issuing bank by the beneficiary.

A documents are genuine and have not been falsified.

C goods delivered meet the terms of the contract.

D invoice is in the same currency as the credit.

24. A documentary credit that is expressed to be revocable:

A can be cancelled at any time by the applicant.

C is not recognised as a credit under the UCP 600 rules.

D will only become payable if the underlying contract is revoked.

A Forward the bill to the exporter.

B Hold the bill until the due date for payment.

C Return the bill to the importer.

D Send the bill to the exchange control authorities.

28. Under ISP98, a standby letter of credit must be: