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Section 11
Tips for Answering Multiple-choice Questions
X In multiple-choice questions the answer follows the question. There are four options and only one is correct. Your task is to identify the correct answer from the plausible, but incorrect, distracter answers. The correct answer is called the key and the other options are called distracters.
X Remember that all multiple-choice questions have the same format — four options but only one correct answer.
X The correct answer is the best answer for each question.
X Only correct answers are scored, so it is to your advantage to answer every question.
X Analyze what the question is asking.
X T ry to answer the question before looking at the options. Then decide which option is closest to your answer and is the best option.
X It is best to answer questions as you proceed through the test booklet.X Place question marks in the margin of your test booklet to indicate questions that require more time or you cannot answer. You can return to these questions when you have completed the other questions.
X As you cannot bring extra paper into the examination room, it is helpful to write directly in your test booklet.
X Be careful of making pencil marks on the answer sheet. An Optical Mark Reader machine scores the answer sheet. It is very important to completely erase pencil markings if you change your mind. Do not make notes on the answer sheet.X You can waste valuable time and increase the opportunity for error if you mark your answers on the answer sheet individually. A preferred method is to circle your answer in the test booklet and transfer your answers in blocks to the answer sheet. T est experts recommend transferring answers after completing each page of questions.
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X The more questions you answer, the better your chances of achieving a passing score. For best results pace yourself, periodically checking your progress.X If you are near the end of the examination period, make your best guess at the unanswered questions by eliminating the incorrect/wrong options. You could get the answer correct.
X Read all instructions carefully.
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Section 12
Pre-examination Checklist
The admission ticket or attendance notice will be received two weeks prior to examination.Select the best route to the test center and identify parking options.Plan to arrive at the test center 30 minutes prior to the examination start.Plan on three full hours to complete the examination after instructions by the test center supervisor.Bring your admission ticket and two forms of identification; one must be a picture ID.Bring several HB/ #2 sharpened pencils; most test centers will not have pencil sharpeners.Bring an eraser and watch as the test center may not have a clock.Do not bring food, beverages, extra paper, books, supplies, etc into the examination room.Do not bring electronic devices into the examination room. You will be disqualified if a pager or phone rings.
Become familiar with the answer sheet on pages 48-49.
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Section 13
Sample Answer Sheet
X The sample answer sheet on the next pages is for illustrative purposes only: the spatial layout for the CDCS examination will be slightly different, eg to allow for the incorporation of the ifs /International Financial Services Association logos.X The instructions to candidates will be as follows:–use only HB/#2 pencil to complete this form;–make sure that you mark your choice with a straight line;–to amend an answer, THOROUGHLY erase and mark the appropriate box;–mark ONE box only for each question;–answer all 120 questions;
X Registration No . – your candidate number as advised to you on your attendance letter/notice.
X Session No . – as advised on your attendance letter/notice.Recertification guidelines Contents page Previous section
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Sample answer sheet
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Section 14
Sample T est
Answers to the Sample T est are in Section 16 page 65
Part A – Multiple-choice Questions
1.Which of the following clauses or notations appearing on the face of the T ransport 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.2.An Issuing Bank becomes bound by the terms of an amendment to a Documentary Credit at the time at which the:
A.Beneficiary accepts the amendment whether expressly or by implication.
B.Reimbursing Bank agrees to the Applicant’s request for an amendment.
C.Advising Bank advises the amendment to the Beneficiary.
D.Issuing Bank issues the amendment to the Advising Bank.
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3.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.
4. A Beneficiary receives an Irrevocable Documentary Credit for which USD 22,500 may be drawn during each month of the Documentary Credit’s one-year validity. The Documentary Credit also indicates that reinstatement is on a cumulative basis. 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, the Beneficiary expects to make a final shipment. What is the maximum value available for this final drawing?
https://www.sodocs.net/doc/802418560.html,D 112,500
https://www.sodocs.net/doc/802418560.html,D 135,000
https://www.sodocs.net/doc/802418560.html,D 157,500
https://www.sodocs.net/doc/802418560.html,D 180,000
5.Which of the following Incoterms is correctly described?
Incoterm
Insurance Doc.Transport Doc .A.DDP Required marked Freight Paid.B.CFR Required marked Freight Collect.C.FOB Not required marked Freight Paid.D.FCA Not required marked Freight Collect.
6.Prior to advising a Documentary Credit to the Beneficiary, the Advising Bank is responsible for:
A.effecting payment against conforming documents.
B.checking the apparent authenticity of the Documentary Credit.
C.notifying the Issuing Bank that the Documentary Credit is being advised.
D.checking that the reimbursement method is effective?
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7. A Documentary Credit states that shipment must be made on or about 27June. Which of the following shipment dates would be acceptable?
1.20 June
2.27 June
3.02 July
4.03 July
A.1 and 2 only.
B.1 and 4 only.
C.2 and 3 only.
D.3 and 4 only.
8.If an Exporter is willing to release the shipping documents directly to the Buyer, but wishes to retain some guarantee of payment should the Buyer fail to pay on the due date, which of the following Documentary Credits BEST suits the Exporter’s needs?
A.T ransferable.
B.Revolving.
C.Standby.
D. Evergreen.
9.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 other instalments.
C.It ceases to be available for that instalment only.
D.
It ceases to be available for that and other instalments.10. 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 3 only.
B.2 and 4 only.
C.1, 2 and 3 only.
D.2, 3 and 4 only.11.Which Documentary Credit enables a Beneficiary to obtain pre-shipment financing without impacting his facility?
A.T ransferable.
B.Red Clause.
C.Irrevocable, payable at sight.
D.Confirmed Irrevocable, payable at maturity.Sample test
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12.Which of the following percentages represents the minimum insured value of goods on the insurance document unless otherwise stated in the Documentary Credit where the CIF/CIP value can be determined?
A.100%.
B.105%.
C.110%.
D.115%.
13.Documents are presented in accordance with the terms of an Unconfirmed Documentary Credit payable at sight and the Nominated Bank chooses to negotiate them. Which of the following statements best describes the Nominated Bank’s actions?
1.Make immediate payment to the Beneficiary.
2.Effect payment on receipt of covering funds.
3.Present documents to the Issuing Bank.
4.Confirm sight to the Reimbursing Bank.
A.1 and 3 only.
B.1 and 4 only.
C.2 and 3 only.
D.2 and 4 only.
14. A Documentary Credit is received without a stipulation of whether partial shipments are allowed. Which of the following statements is applicable?
A.They are allowed.
B.Refer to the Issuing Bank.
C.Refer to the Beneficiary.
D.They are prohibited.
15.When a bank confirms an Irrevocable T ransferable 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
16.When an Advising Bank has accepted a Time/Usance Draft under an Advised Documentary Credit, they are responsible for effecting payment at maturity when:
A.they have received funds from the Issuing Bank.
B.they have received funds from the Reimbursing Bank.
C.the draft is verified by the Applicant.
D.the draft is presented by the Beneficiary.
Sample test
17.Delivery of goods has been made to the buyer on 08 October. The relevant
documents were presented in order, including a CMR dated 15 days prior to delivery. The Documentary Credit terms state that payment is to be effected
30 days after shipment. On which date will payment be made? (There are
NO bank holidays and Saturdays and Sundays are NOT banking days.)
A.Friday22 October.
B.Monday25 October.
C.Friday05 November.
D.Monday08 November.
18.The Confirming Bank receives documents on Friday 02 April and finds them
to be in order on 05 April. T enor is 30 days after the Bill of Lading date. The Bill of Lading is dated 01 April, and the Confirming Bank agrees to pay the Beneficiary immediately. On what date would the Confirming Bank expect to receive funds from the Issuing Bank? (There are NO bank holidays and Saturdays and Sundays are NOT banking days.)
A.05 April.
B.12 April.
C.30 April.
D.03 May.
19.If an Applicant requests that the Documentary Credit expires for presentation
at the Issuing Bank with drafts drawn on the Issuing Bank 90 days after sight, how should the Documentary Credit be made available?
A.By sight payment.
B.By deferred payment.
C.By acceptance.
D.By negotiation.
20. A Documentary Credit that will become available for presentation of shipping
documents to the Issuing Bank only after it has received and approved a performance guarantee is usually described as:
A.Standby.
B.Revocable.
C.Inoperative.
D.Advance Payment.
21.In accordance with UCP, what is the maximum number of banking days
(inclusive of presentation date) that a Confirming Bank is allowed to refuse the documents?
A.One.
B.Three.
C.Seven.
D.Eight.
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22.What should an Advising Bank do if it receives a Documentary Credit from the Issuing Bank which includes the term ‘T ransmissible’?
A.Disregard the term.
B.Seek clarification.
C.Advise the Documentary Credit as transferable.
D.Refuse to advise the Documentary Credit.
23. A Documentary Credit calls for presentation of an Insurance Certificate.Which of the following insurance documents would be acceptable for CIF shipment where the invoice value is USD 75,000?
1.Insurance Certificate for USD 82,500.
2.Insurance Policy for USD 85,000.
3.Insurance Declaration under Open Cover for USD 75,000.
4.Insurance Certificate for USD 75,000.
A.1 and 2 only.
B.1 and 4 only.
C.2 and 3 only.
D.3 and 4 only.
24. In accordance with UCP all the following statements relating to commercial invoices under a non-transferable Documentary Credit are correct EXCEPT the commercial invoices 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.
25.An Issuing Bank has issued a sight Documentary Credit to a Beneficiary authorizing a Nominated Bank to pay the Beneficiary for all documents presented in accordance with the Documentary Credit terms and conditions.Upon receipt of complying documents drawn under the Documentary Credit direct from the Beneficiary, the Issuing Bank should:
A.examine the documents and pay the Beneficiary.
B.verify the documents and pay the Nominated Bank.
C.return the documents to the Beneficiary for presentation to the Nominated Bank.
D.remit the documents to the Nominated Bank for examination.
Sample test
26.Which party has the MOST responsibility to examine the terms and conditions
of a Documentary Credit against the sales agreement?
A.Applicant.
B.Beneficiary.
C.Issuing Bank.
D.Confirming Bank.
27.Which of the following classification types BEST describes a Standby Credit
that is intended to be the primary means of payment?
A.Bid bond.
B.Direct pay.
C.Performance.
D.Advance payment.
28.In the case of a Non-cumulative Revolving Documentary Credit available for
USD 10,000 per month and valid for six months, which of the following statements is correct?
1.The face value of the credit is USD 10,000.
2.The face value of the credit is USD 60,000.
3.The amount(s) not utilized in one month may be carried over to the
next.
4.The total undertaking of the Issuing Bank is USD 60,000.
A.1 and 3 only.
B.1 and 4 only.
C.2 and 3 only.
D.2 and 4 only.
29. A Confirming Bank examines documents under a Documentary Credit, which
requires presentation of an Invoice, Certificate of Origin and an Ocean Bill of Lading. The Documentary Credit also includes the following clause:‘Special condition – all packages must be clearly marked with the country
of origin.’
Where the documents do NOT show that the packages have been marked in this way and are otherwise in order, the Confirming Bank should:
A.reject the documents and suggest to the Beneficiary that he present a
certificate evidencing that this condition has been complied with.
B.reject the documents and suggest to the Beneficiary that the Certificate
of Origin be amended to include the special condition.
C.contact the Issuing Bank and withhold payment until clarification is
received.
D.ignore the special condition and honour the Beneficiary’s presentation of
documents.
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30.Documents under a Documentary Credit are tendered at the counters of the Confirming Bank and are mistakenly found to comply with its terms and conditions. The Confirming Bank pays the Beneficiary and forwards the documents to the Issuing Bank. Upon receipt by the Issuing Bank, the documents are checked and found to be discrepant. The Issuing Bank notifies the Confirming Bank of all discrepancies ten banking days after receipt and refuses to reimburse. In considering whether the Confirming Bank can recover funds paid, which of the following statements are correct? It:
1.can recover from the Beneficiary.
2.cannot recover from the Beneficiary.
3.can recover from the Issuing Bank.
4.cannot recover from the Issuing Bank.
A.1 and 3 only.
B.1 and 4 only.
C.2 and 3 only.
D.2 and 4 only.
31. 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.32.What is the applicable Incoterm for an Airway Bill marked ‘Freight Prepaid’?
A.FCA.
B.CFR.
C.CPT.
D.DAF .
Sample test
Part B – Simulation
INSTRUCTIONS
You are the Letter of Credit issuer at ABC Bank plc and are requested to identify five irregularities in the application form attached.
INFORMATION
Application for Documentary Letter of Credit
Applicant:Savage Steel plc
Issuing Bank:ABC Bank Plc
Amount:USD 120,00.00
Savage Steel Facilities with ABC Bank plc
USD 1,600,000
Current Exposure
USD 1,104,000
SUPPORTING DOCUMENTATION
1)Irregularity checklist.
2)Irrevocable Documentary Credit Application Form. INSTRUCTIONS TO STUDENTS
Identify the five irregularities on the attached irregularity checklist (document 1) then transfer your answer to the main answer sheet.
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Irrevocable Documentary Credit Application Form Applicant:
Savage Steel plc
Tilton Road
Birmingham
England
Date of Application: 1 March XX Issue by (air) Mail with brief advice by teletransmission (see UCP 500 Article 11);Issue by teletransmission (see UCP 500 Article 11) Transferable Credit – As per UCP 500Article 48Confirmation of the Credit:;not requested requested authorized if requested by Beneficiary Partial shipments allowed ; not allowed Transhipments allowed ; not allowed Please refer to UCP 500 transport Articles for exceptions to this condition ;Insurance will be covered by us
Shipment as defined in UCP 500 Article 46From: Newark, New Jersey
For transportation to: Southampton ,England Not later than: 15 May XX
Goods (Brief description without excessive details – See UCP 500Article 5):
Flat rolled steel as per
previous
Letter of Credit ref DC 731264
Dated 10 January XX Issuing Bank:ABC Bank plc London England Expiry Date and Place for Presentation of documents Expiry Date: 31.5.XX Place for Presentation: Pittsburgh
Beneficiary:
Kirovski Steel Supplies
Pittsburgh
Pennsylvania USA
Amount in figures and words (Please use ISO Currency Codes):
USD 120,000
Dollars one hundred and twenty
thousand
Credit available with Nominated Bank:
Second Pennsylvannia Bank,
Pittsburgh ;by payment at sight
by deferred payment at: by acceptance of drafts at:
by negotiation Against the documents detailed herein:;and Beneficiary’s drafts(s) drawn on: ABC Bank, London |Terms:| FAS ;CIF | FOB Other terms :| CFR as per INCOTERMS
Sample test
Irrevocable Documentary Credit Application Form (continued)
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CDCS study guide 62Irregularity Checklist
1.Applicant’s facilities with Issuing Bank would be exceeded if Documentary Credit issued.
?2.Description of goods unacceptable.
?3.Inappropriate insurance specification.
?https://www.sodocs.net/doc/802418560.html,test shipment date/expiry date incompatible with presentation period.
?5.Pricing of goods does not match value of the credit.
?6.Request for validation of document(s) unacceptable.
?7.Incorrect type of transport document requested
?8.Additional instructions incompatible.
?9.Shipping terms incompatible with transport document.
?10.Issuer of some document(s) is ambiguous.
?11.Draft drawee unacceptable.
?12.Non-documentary condition(s) stipulated.
?13.Inconsistent insurance requirement.
?14.Country of origin not specified.
?15.Confirmation instructions ambiguous
?
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