PRACTICE TEST TRADE FINANCE

1. The unequal distribution of the following necessitates

trade :
a. Resources and skills
b. Resources only
c. Skills only
d. None of the above
2. The two categories of Domestic Trade are :
a. Wholesale and Retail
b. Internal and external
c. Intra state and inter- state
d. None of the above
3. International trade has been carried on
a. Since centuries
b. Since the beginning of 20th century
c. Only after British occupied India
d. From Moghul Empire era
4. Banks extend trade finance for
a. Both domestic and international trade
b. Only domestic trade
c. Only international trade
d. Only wholesale trade
5. Trade finance provides to Banks
a. Both interest and fee based income
b. Only fee based income
c. Only interest income
d. Only consultancy fee
6. David Recardos theory of trade
a. Is based on comparative advantage
b. Is based on absolute advantage
c. Is based on distribution of factors of production
d. Is based on neutral effect of resources on trade
7. WTO is committed to
a. Promotion of free international trade

b. Formation of regional blocks

c. Restrictive trade practices to protect domestic
trade
d. Provide training in foreign trade
8. UCPDC is a publication brought out by
a. International Chamber of Commerce
b. International Court of Arbitration
c. World Trade Organization
d. International Maritime Bureau
9. Dumping refers to
a. Selling below fair market value
b. Underselling
c. Increasing the supply of a product
d. Reducing the demand for a product
10.
The three components of trade are
a. Goods, funds and documents
b. Transport, delivery and pricing
c. Value, money and services
d. Time schedule, advance payment and rebate
11.
The major types of risks in trade transactions are
a. Operational risk, exchange risk and commercial
risk
b. Investment risk, interest rate risk and liquidity risk
c. Credit risk, legal risk and reputation risk
d. None of the above
12.
Offering BPO service from India is deemed as
a. Non-physical exports
b. Software exports
c. Medical transcription
d. Indigenous services
13.
The Clean Payment mode of trade settlement
involves
a. Advance payment or open account
b. Docs for collection and advance payment

c. Open account and documentary credits

d. Docs for collection and documentary credits
14.
One of the following does not belong to the
group
a. Certificate of Origin
b. Railway receipt
c. Combined transport doc
d. Bill of lading
15.
Advance payment method is most favourable to
a. Seller
b. Buyer
c. Both seller and buyer
d. Intermediary / agent
16.
Open account transaction is most favourable to
a. Buyer
b. Seller
c. Both buyer and seller
d. Not favourable to anyone
17.
In a foreign documentary bill for collection the
exporters bank is known as
a. Remitting Bank
b. Presenting Bank
c. Collecting Bank
d. Reimbursing Bank
18.
Remitting Bank acts as an Agent of
a. Seller
b. Buyer
c. Presenting Bank
d. Collecting Bank
19.
Documentary collection of export proceeds are
governed by
a. Uniform Rules for Collection (ICC Publication)
b. UCPDC
c. Incoterms

d. None of the above

20.
Sales Contract is signed by
a. Seller and buyer or their representatives
b. Buyer and their banker
c. Seller and buyers Bank
d. Seller and his agent
21.
A trade bill is called as Clean Bill if
a. It is not accompanied by document of title to
goods
b. It is not accompanied by bill of exchange
c. It is payable at sight
d. It is not accompanied by commercial invoice
22.
Noting and Protesting are
a. Formalrepresentations of dishonor of a Bill
b. Evidence of acceptance
c. Evidence of payment
d. Legal document of filing suit against the buyer
23.
The CASE IN NEED is
a. A person in buyers place to contact when bill is
not accepted or paid
b. The alternative buyer
c. The person chosen to accept the bill
d. The person liable to make payment
24.
If the bill is drawn on USANCE DP terms ,it
means
a. Drawee is given some time to pay after accepting
the bill
b. Goods are delivered on identification
c. Goods are delivered on acceptance
d. Goods and payment of money are not linked to
each other
25.
USANCE DA terms means
a. Goods are delivered on acceptance and payment is
made later

b. No access is given to goods unless money is paid

c. Goods are released on trust basis and money is
collected later
d. Documents are delivered free of payment
26.
Bill drawn on DA terms is advantageous to
a. Buyer
b. Seller
c. Remitting Bank
d. Presenting Bank
27.
Bill drawn on SIGHT-DP terms is favourable to
a. Seller
b. Buyer
c. Both buyer and seller
d. Neither the buyer or seller
28.
Incoterms is a set of
a. Standardized trade terms
b. Conventional trade practices
c. Pricing equations
d. Agreement between any two countries
29.
Which of the following trade terms is most
favourable to the seller ?
a. Ex-Works
b. FAS
c. DDP
d. CIF
30.
Which of the following trade terms is most
favourable to the buyer ?
a. DDP
b. EX-WORKS
c. FOB
d. DAP
31.
In which of the following trade terms , the seller
has to arrange for insurance of goods ?
a. CIF AND CIP

b. DDT AND DDP

c. FOB AND FAS
d. EXWORKS AND CFR
32.
Incoterms has implications of the following :
a. Costs, risk and delivery responsibility
b. Costs only
c. Risks only
d. Delivery only
33.
Incoterms is published by
a. International Chamber of Commerce, Paris
b. World Trade Organization
c. International Monetary Fund
d. United Nations Organization
34.
In international trade, documents reach
a. Earlier than goods
b. Later than goods
c. Along with goods
d. On the same day of sale conclusion
35.
Which of the following statements is TRUE ?
a. All document of title to goods are trade docs
b. All trade docs are document of title to goods
c. Excepting commercial invoice , all other docs are
trade docs
d. Excepting transport docs, all other docs are
document of title to goods
36.
Bill of Lading is used in sea shipment and it is
a. A negotiable document
b. A non-negotiable document
c. Is a receipt for goods accepted for transport
d. Is a packing list of packaged loaded on the ship
37.
An Airway Bill is
a. A receipt and not a document of title to goods
b. Is a quasi- negotiable document
c. Is a evidence of air shipment and is transferable

d. Is a safe custody receipt to be exchanged for Air

Consignment Note later
38.
A received for shipment notation in a Bill of
Lading
a. May not necessarily mean that goods are shipped
on board
b. Confirms that goods are loaded on the ship
c. Means customs inspection is pending
d. Means goods will be accepted for shipment only if
freight is paid in advance
39.
A Bill of Lading is considered as CLEAN
a. If it does not indicate that either the packaging or
goods are damaged and / or defective
b. If it is written that it is a CLEAN Bill of Lading
c. No words to the effect that goods are dirty and
soiled
d. If Shipment is made within the time stipulated
40.
Airway Bill is issued in sets of
a. Three originals
b. Two originals
c. One original and two copies
d. One original only
41.
In LC transactions, which document should
contain the description of goods exactly as
mentioned in the LC ?
a. Commercial invoice
b. Transport document
c. Draft
d. Pre-shipment Inspection Certificate
42.
Which document is deemed as clear proof of
demand of payment in International trade ?
a. Draft (Bill of Exchange)
b. Transport document
c. Commercial invoice

d. Certificate of origin
43.
An insurance certificate is
a. Not assignable to a third party
b. A negotiable doc and can be transferred
c. A substitute for policy and is identical
d. A document of title to right of receipt claims
44.
The minimum of insurance coverage stipulated
in UCPDC is
a. CIF Value + 10 %
b. CIF Value
c. FOB Value
d. Value of goods shipped
45.
Who is not a party to LC transaction in the
following ?
a. Airline
b. Advising bank
c. Beneficiary
d. Issuing bank
46.
Confirmation can be added to the LC only if the
advising bank is requested by
a. LC issuing bank
b. Importer
c. Exporter
d. Nominated bank
47.
PROTESTING A BILL means
a. Fact of non-aceptance / non-payment of a bill is
written and confirmed by the Notary Public
b. Giving a notice to the drawee to accept or pay
c. Sending an intimation to the remitting bank about
dishonor
d. Seeking disposal instructions from the seller of
goods

48.
Sending several shipments under one LC in a
fixed period of time is possible under which of the
following ?
a. Revolving LC
b. Transferable LC
c. Stand By LC
d. Green Clause LC
49.
ON BOARD notation in a BL implies that
a. Goods have been loaded on the ship
b. Goods have been accepted for transportation
c. Freight has been paid in advance
d. Goods received for shipment awaiting the arrival
of the vessel
50.
An Indian exporter ships goods directly from
Srilanka to USA and the goods do not enter India.
What is this trade called as ?
a. MerchantingTrade
b. Counter Trade
c. High Sea Sales
d. This is not allowed as per Indian trade policy
51.
What is the document issued by a Bank to help
the importer to take delivery of goods before receipt
of transport doc?
a. Delivery Order
b. Power of Attorney
c. Letter of Authorization
d. Shipping lien
52.
Maximum time within which export proceeds are
to be realized is
a. With in nine months from date of export
b. In 12 months from date of export
c. In 6 months from date of export
d. In 15 months from the date of export

53.
The evidence of physical import of goods is
verified from
a. Bill of Entry
b. EDF
c. Shipping Bill
d. Copy of transport doc
54.
Possession of IEC is mandatory to carry on
export/import trade for everybody except
a. Departments of Central and State Governments
b. Chamber of Commerce
c. Export Promotion Councils
d. Status Export Holders
55.
Undrawn balance in export bills may be
permitted upto a maximum of
a. 10 % of purchase value
b. 15 % of purchase value
c. 25 % of purchase value
d. Left to the discretion of the AD - Cat I Bank
56.
Export finance can be classified as
a. Pre-shipment and Post shipment
b. Inventory and sales financing
c. Channel and supply chain financing
d. Packing and unpacking credit
57.
Any loan raised from a Bank is
a. A source of fund
b. A use of fund
c. An asset
d. A contingent liability
58.
Repayment of a loan is considered as
a. A use of fund
b. A source of fund
c. A liability
d. A moral obligation met

59.
As per RBI exchange control rules, export docs
must be submitted to a Bank
a. within 21 days after shipment
b. within 10 days after shipment
c. within 7 days after shipment
d. within one month from date of shipment
60.
if the LC is silent, it is
a. not transferable
b. is transferable
c. is transferable if sale contract permits it
d. is transferable if applicant confirms it in writing
61.
crystallization of a overdue bill means
a. Converting FC liability into Rupee liability
b. Return the bill as it is overdue
c. Process of noting and protesting
d. Recovery of bill amount
62.
As per UCPDC the maximum period allowed to
accept or reject the documents is
a. Five banking days following the date of
presentation
b. Five calendar days from the date of presentation
c. One week from the date of presentation
d. None of the above
63.
As per UCPDC the principle of Strict
Compliance is essential
a. To demand the amount from issuing bank
b. To advise the LC to the beneficiary
c. To recover charges from issuing bank
d. There is no such principle involved
64.
The confirming banks undertaking is identical to
a. LC issuing Bank
b. Advising bank
c. Reimbursing bank
d. Negotiating bank

65.
A BL is issued in sets of two / three / four
originals. For taking delivery of cargo it is essential to
submit
a. Any one original
b. Any two original
c. All the original
d. A delivery order signed by the bank and BL is not
required
66.
Under exchange control rules if the sight DP
export bill is not paid , the exporter
a. May covert it to DA bill
b. Has to immediately rebook the cargo back into
India
c. To discard the cargo
d. File a case against the importer immediately
67.
The unloading of cargo from one vessel to
another vessel during the voyage from port of
loading to the port of discharge is known as :
a. Transshipment
b. Short shipment
c. Part shipment
d. Shut out shipment
68.
Any advance payment received for export of
goods the exporter has to
a. Export the goods within one year from date of
receipt of advance
b. Should refund the advance if the export does not
take place within 3 months from date of receipt of
advance
c. Pay interest upto the date of export
d. Export atleast 50 % of goods in 6 months time

69.
If the bank is closed due to strike by employees
for three working days, the last date stipulated for
presentation of docs
a. Will remain as originally fixed and cannot be
extended
b. May be deferred by three days
c. May be extended maximum by two days
d. UCPDC is silent on this issue
70.
If the last date for negotiation happens to be a
public holiday, the documents can be presented on
a. The following banking day
b. Within one week from the date of holiday
c. It will be considered as late presentation if
presented on any day subsequent to the holiday
d. The preceding banking day
71.
Which are the items that can be freely
imported ?
a. Item not listed under prohibited and restricted
category
b. Item listed under the OGL category
c. Item not listed under the prohibited category
d. Items not listed under the negative category
72.
Duty draw back credit provided to exporters
a. Reduces the cost of production
b. Reduces the profit
c. Is deducted from taxes
d. Is to provide protection to domestic traders
73.
Deemed exporters may be paid in
a. Indian rupee or free foreign exchange
b. Only in Indian rupee
c. Only in US DOLLAR
d. Only in EURO

74.
If the export order is quoted on CIF terms, how
to find out the FOB value for the purpose of providing
export credit ?
a. By deducting the freight cost and the insurance
premium from the CIF value
b. By adding the freight
c. By adding the insurance premium
d. By deducting a flat 25% from the order value
75.
When an LC gets converted into fund based
advance ?
a. When the applicant (importer) fails to pay the bill
amount on due date
b. When the LC is outstanding beyond 30 days
c. When the LC is more than 3 months old
d. When the beneficiary demands payment from the
Bank
76.
What does complying presentation or clean
negotiation mean in an LC transaction ?
a. Means docs presented are strictly in conformity
with LC
b. Means shipment has been made within the
stipulated date
c. If the certificate of origin has been presented
d. If all the documents are signed
77.
Whether the documents dated prior to date of
LC are acceptable ?
a. If LC is silent, it is acceptable
b. It is not acceptable as per UCPDC rules
c. If it is transferable LC , it is acceptable
d. If it is a revolving LC , it is acceptable
78.
An amendment is operative
a. Only if it is accepted by the beneficiary

b. If it is advised by the same advising bank which

originally advised the LC
c. If the LC is transferable credit
d. If it is confirmed by another bank
79.
For normal imports the value of the import has
to be remitted to the overseas supplier within
a. Six months from the date of shipment
b. Within nine months from the date of shipment
c. On the due date fixed by the overseas supplier
d. Within 12 months from the date of shipment
80.
For all imports, the importer has to submit to
the Bank
a. Form A-1
b. Bill of Entry
c. Shipping bill
d. Copy of transport doc
81.
In an FOB contract , the freight is paid by the
a. Importer
b. Exporter
c. Agent
d. The importers bank against recovery from the
importer
82.
In many countries , issue of bank guarantees is
not permitted. So the type of LC issued as a
substitute for bank guarantee is known as
a. Stand By LC
b. Revolving LC
c. Back to Back LC
d. Freely Negotiable LC
83.
Under UCPDC, Insurance policy issued later than
the date of shipment is
a. Acceptable provided the coverage is available from
the date of shipment
b. Not acceptable

c. Acceptable provided it is issued in foreign currency

d. Acceptable as date of policy is deemed as date of
shipment
84.
The current foreign trade policy of India is valid
till
a. 31/03/2020
b. 31/12/2019
c. 31/03/2021
d. 31/12/2020
85.
What is the time limit for making remittance for
import of Books ?
a. Without any restriction of time
b. Within 6 months from shipment date
c. Within 2 years from shipment date
d. Within 1 year from shipment date
86.
A combined transport document (multi modal
doc) ensures shipment
a. From sellers warehouse to buyers warehouse
b. From one port to another port
c. From sellers factory to the nearest sea or airport in
the buyers country
d. From one carrier to another carrier in same country
87.
When a PP Form is to be countersigned by the
Bank, they will generally agree provided
a. Advance payment for full value has already been
received or an irrevocable LC is available and
consignment of goods directly to the importer is
permitted by the issuing bank
b. Exporter submits an undertaking to indemnify the
bank
c. Exporter furnishes a guarantee bond for the value
d. Confirming bank is agreeable to this arrangement
88.
As per UCPDC, Banks deal with

a. Only documents
b. Goods and documents
c. Goods and services
d. Documents and services but not goods
89.
Negotiating Bank can claim the value of
negotiation from the reimbursing bank
a. Without furnishing the certificate of compliance
b. Only with submission of a certificate of compliance
c. Only after the issuing bank confirms the
negotiation
d. By giving a guarantee in favour of the reimbursing
bank
90.
A commercial invoice as per UCPDC rules
a. Need not be signed
b. Must be manually signed
c. May be digitally signed
d. May bear a facsimile signature
91.
What is the tolerance limit allowed as per UCPDC
, if the words like about or approximately is used
in connection to the amount of LC ?
a. 10 %
b. 5 %
c. Zero %
d. 25 %
92.
If the LC is silent part shipment is
a. Allowed
b. Not allowed
c. Allowed if the exporter requests the negotiating
bank
d. Allowed upto two shipments only
93.
In a transferable credit, the credit can be
transferred in part to more than one second
beneficiary
a. Provided partial shipments / drawings are allowed

b. Is allowed without any conditions

c. Is allowed only if the sale contract permits it
d. Is allowed if the credit is confirmed by another
bank
94.
If a transport document presented under the LC
transpires to be a forged document, the issuing bank
a. Is not liable for any loss to the importer
b. Is liable to the importer
c. Is responsible to recover the loss from the exporter
d. Is expected to compensate the importer if he
cannot recover from the exporter
95.
If the LC is silent about transshipment , then it is
deemed as
a. Permitted
b. Not permitted
c. Permitted if it is a Revolving LC
d. Permitted if it is a Stand By LC
96.
If the LC is silent about chartered party BL, it is
deemed as
a. Prohibited
b. Permitted
c. Permitted in case of transferable LCs only
d. Permitted in all types of LCs except Stand By LCs
97.
If the LC is silent about third party shipment, it is
deemed as
a. Permitted
b. Not permitted
c. Permitted only in case of Transferable LCs
d. Permitted only if the sale contract allows it
98.
As per UCPDC , the currency of insurance
a. Must be same as that of LC unless otherwise
specified
b. May be in any freely convertible currency
c. Must be in the currency of the importers country

d. Must be in the currency of the exporters country

99.
In a Transferable LC , whether one of the second
beneficiaries can reject the amendment while other
second beneficiaries have accepted ?
a. Yes
b. No
c. No amendments are allowed to be advised to the
second beneficiaries as per UCPDC rules
d. Yes only if part shipments are permitted
100. When documents not stipulated in LC are
presented, the documents are considered as
a. Not discrepant
b. Discrepant
c. Defective
d. Can be accepted provided the applicant permits
them in writing