At present you have some goods ready in stock but lack in fund for prepare for shipment.

Goods
are rare in market and the Buyer is located in Sri-Lanka and urgently needs them. Which payment
method will you prefer:
1 a. Open account
b. Advance Payment
c. Documentary Collection
d. Documentary Credit
Under which trade payment method, the buyer gets an opportunity to examine goods and
documents prior to give any payment undertaking?
a. Cash in advance
2
b. Open Account
c. Documentary Collection
d. Documentary Credit
The Exporter who is your customer, is not a manufacturer or producer of goods. The customer has
no credit limit with your Bank. How the exporter can execute an order under Documentary
Credit?
1. Transferable Credit
2. Back to Back Letter of Credit
3. Assignment of Proceeds
3
4. Revolving Credit
The Correct options are:
a. 1,2 & 3
b. 1 & 3
c. 2
d. All of the above
The Exporter who is your customer, is not a manufacturer or producer of goods. On the contrary,
Supplier of the Goods Demand documentary credit for shipment. How the exporter can execute
an order under Documentary Credit?
1. Transferable Credit
2. Back to Back Letter of Credit
4 3. Assignment of Proceeds
The Correct options are:
a. 1
b. 2
c. 1 & 2
d. All of the above
The Exporter who is your customer, is not a manufacturer or producer of goods. But, the exporter
does not want to disclose its position as “Trader’ to the applicant. How the exporter can execute
an order under Documentary Credit?
1. Transferable Credit
2. Back to Back Letter of Credit
5 3. Assignment of Proceeds
The Correct options are:
a. 2
b. 3
c. 1 & 3
d. 2 & 3
6 The Exporter who is your customer, is not a manufacturer or producer of goods. How the exporter
can execute its export order without involving the supplier under Documentary Credit operation?
1. Transferable Credit
 2. Back to Back Letter of Credit
3. Assignment of Proceeds
The Correct options are:
a. 1
b. 2
c. 3
d. All of the above
Why would you as a banker would recommend your Customer who is an Exporter, Advance
payment as Trade Settlement Method?
I. Seller has no Security of payment dependent only upon buyer credit worthiness and good
faith
II. Buyer to provide Payment guarantee after Document Examination
III. Buyer wants long-term trade relationship
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IV. Seller wants pre-shipment finance
The Correct options are:
a. i and ii
b. i, ii and iii
c. iii and iv
d. all of the above
Which of the following is not a reason for adapting Open Account terms?
a. two companies have a long established trading relationship
8 b. Buyer wishes engage seller in a long term trading relationship
c. Lesser banking fees
d. Seller is confident with the buyer’s country risk
The Exporter who is your customer, is not a manufacturer or producer of goods. The customer has
no credit limit with your Bank and also does not want to disclose its position as “Trader’ to the
applicant How the exporter can execute an order under Documentary Credit?
1. Transferable Credit
2. Back to Back Letter of Credit
3. Assignment of Proceeds
9
4. Revolving Credit
The Correct options are:
a. 1,2 & 3
b. 2 & 3
c. 3
d. All of the above
Which of the following is not True for Transferable and Back to Back Letter of Credit:
a. Both involve trader or middle man
10 b. Both involve substitution of documents
c. Both should be issues so that they expire at the counter of nominated bank
d. Both have specific guidance or article in UCP
A credit states that it is cumulative and automatic and allows USD 20000.00 can be drawn each
month during 6-month validity. The beneficiary able to make shipment and presentation on 1 st
and 3rd month only, the liability of the issuing bank on the 4th month will be-
11 a. USD 20000
b. USD 50000
c. USD 40000
d. USD 80000
12 Which of the following is an example of clean credit?
a. Commercial Letter of Credit
 b. Performance Letter of Credit
c. Advance Payment Letter of Credit
d. Direct Payment Standby
The revolving credit depends on:
a. Type of Revolving (Time and Value)
13 b. Revolving: automatic or non-automatic
c. Revolving: cumulative or non-cumulative
d. All of the above
Under which payment settlement system banks act as intermediaries in the transaction,
with responsibilities for channeling the documents between the buyer and seller?
i. Open account trading
ii. Payment in advance
iii. Documentary credits
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iv. Documentary collection
A. ii & iii
B. iv only
C. i & ii only
D. iii & iv only
Your customer is an exporter. Which payment term exposes it to least risk?
a. Open account
15 b. Documentary credit
c. Payment in advance
d. Documentary collection
Your customer is an importer. Which payment term exposes it to least risk?
a. Open account
16 b. Documentary credit
c. Payment in advance
d. Documentary collection
Which type of documentary credit provides a pre-shipment facility to the beneficiary?
a. Irrevocable credit
17 b. Confirmed credit
c. Red clause credit
d. Revolving credit
Which of the followings are executed when buyer-seller have long-established trading
relationship.
I. Open account
II. Advance Payment
III. Revolving documentary credits
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IV. Reinstatement documentary credits
a. I and II
b. I, II and III
c. I and III
d. All of the above
Which of the following statements is correct in respect of a transferable documentary credit?
Select two correct answers.
a. It will involve more than one presentation of documents.
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b. The trader is known as the second beneficiary and supplies the goods or services.
c. It will usually involve more than one country.
d. Any amendment will automatically apply to the transferred documentary credit.
19 Which of the Following will not minimize risk related to transferable documentary credit:
 a. Restrict honour or negotiation and transfer to a single nominated bank
b. Transferred documentary credit should clearly indicate the routing instructions for the
documents
c. Applicant should make aware that amendments to be accepted or rejected by different
second beneficiaries
d. Regarding amendments obtaining second beneficiary’s and first beneficiary’s agreement
to an agreed course of action
A credit states in Documents Required Field: ‘Certificate of Origin’ to be issued by a Local
authority. The ‘Certificate of Origin’ can be issued by the following parties except:
a. Chamber of Commerce
20
b. Ministry of Commerce
c. Beneficiary
d. Export Control Board
Your customer Nice Textiles Ltd has entered into a contract with Good Dyes Inc to Import dyes of
various colors. Your customer’s factory is set up to produce different color tog clothes each month
and they require the color and quantity of the dye shipped to match their production schedule. In
order to control inventory costs and ensure adherence to their production schedule, your
customer wants to ensure that they receive exactly one month’s requirement of dyes in each
21 shipment within the stipulated delivery dates. Which type of LC will best suit your customer’s
needs?
a. Cumulative revolving Letter of credit
b. Red clause documentary credit
c. Standby Letter of Credit
d. Installment Letter of Credit
Where a credit includes a shipment schedule and an installment is not shipped within stipulated
period, which of the following statements regarding the credit is correct?
a. It continues to be available for that instalment only
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b. It ceases to be available for that and other instalments
c. It continues to be available for that and other instalments
d. It ceases to be available for that instalment only
A Credit was issued on 01.05.2022 allowing Shipment in the end of July 2022. Then Beneficiary
can ship?
a. On 30th July 2022 only
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b. Any day after 01.07.2022
c. Between 21-30th July2022
d. Between 15-30th July 2022
A Credit was issued on 01.02.2022 allowing Shipment before the middle of May 2022. Then
Beneficiary can ship?
a. Any day before 15th May 2022
24
b. From 11th to 20th May 2022
c. Any day before 11th May 2022
d. From 15th to 31st May 2022
A credit was issued on 01.06.2020 allowing Shipments till August 2020. Then which will be the
latest Shipment Date?
a. Any day before 31st August
25
b. 30th August
c. 31st August
d. 21st to 31st August
26 A credit issued in favor of beneficiary in Singapore requires a ‘Certificate of Origin to be issued by
an Independent Chamber of Commerce’. The product is Made in China. Which of the following
 parties can issue the certificate of origin?
a. Chamber of Commerce of Singapore
b. Chamber of Commerce of China
c. Either Chamber of Commerce of Singapore or China
d. Any Chamber of Commerce
A credit issued on 01.02.xxxx(Monday) having a condition “Document must be presented on or
about 09.02.xxxx”. Beneficiary made its Presentation on 15.02.xxxx. the Presentation is:
a. Late Presentation
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b. Timely Presentation
c. Not made
d. Late Shipment
A credit state shipment must be made on or about 6th April 2022(Wednesday), what is to be the
last date of shipment?
a. 11th April
28
b. 6th April
c. 12th April
d. 1st April
A credit states ‘shipment is to be made on or about 25.04.2022’. What is the latest date of
Shipment under the credit?
a. 20th April 2022
29
b. 25th April 2022
c. 30th April 2022
d. 20th to 30th April 2022
A credit states ‘shipment is to be made on or about 15.05.2020’. What is the earliest date of
Shipment under the credit?
a. 10th May 2020
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b. 11th May 2020
c. 20th May 2020
d. 15th May 2020