Which of the following statements is correct:

A. A credit can be available by a draft drawn on the applicant.

1 B. A credit may require a draft drawn on the applicant.
C. A bank can negotiate a draft drawn on it.
D. None of the above statements is correct.
By issuing a credit available with a nominated bank, an issuing bank actually issues:
A. No undertaking
2 B. A single undertaking.
C. Two separate undertakings.
D. Three separate undertakings.
An issuing bank is irrevocably obligated to honor as of the time:
A. The credit is issued.
3 B. The credit is advised.
C. Complying presentation is made to the nominated bank.
D. Complying presentation is made to the issuing bank.
A confirmed credit available by negotiation with any bank can be negotiated by:
A. Any bank.
4 B. Confirming bank only
C. Any bank except issuing bank
D. Any bank except issuing and confirming bank
A credit issued by ABC Bank is available with XYZ Bank by acceptance of beneficiary’s draft at 60
days sight. The beneficiary wishes to avail the credit from the nominated bank, XYZ Bank, which
has agreed to act on its nomination and has communicated the same to the beneficiary. The draft
5 prepared by the beneficiary to be drawn on:
A. The issuing bank
B. The nominated bank
C. The applicant
D. Either of the issuing bank or nominated bank
A Nominated bank can communicate its agreement to act on issuing bank’s nomination by:
a) Express agreement
b) Checking of documents for determining whether it is complying
c) Remaining Silent
d) Honor/Negotiate
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A. All of the above
B. Only (a)
C. Both (a) and (b)
D. (a) and (d)
Can negotiation be made after the expiry of the credit?
7 A. Yes
B. No
A credit is available with a nominated bank by acceptance. Which of the following statement is
correct?
A. The nominated bank will require authorization from the issuing bank for discounting its acceptance
8 B. The nominated bank is automatically authorized from the issuing bank for discounting its acceptance
and no further permission is required.
C. The nominated bank can no way discount its acceptance.
D. None of the above is correct
Which of the following options are correct under a credit “available by” with requiring a draft
drawn with Credit Available with an issuing bank:
i. Payment
ii. Deferred Payment
iii. Acceptance
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iv. Negotiation
a. i and ii only
b. ii and iii only
c. i and iii only
d. iii and iv only
 A documentary credit calls for a draft at 95 days from Shipped on Board date and as per Credit
availability it is drawn on confirming bank. The documentary credit available by:
a. Payment
10
b. Deferred payment
c. Acceptance
d. Negotiation
Under which credit availability. A credit can be issued both for the tenor: sight and Usance?
a. By acceptance
11 b. By Negotiation
c. By Deferred Payment
d. By Payment
A credit available with any bank by negotiation. Credit is confirmed by Ocean Bank Ltd. Beneficiary
made its complying presentation to River Bank Ltd., but it refuses to negotiate the bill. Upon
request of the beneficiary, River Bank forwarded the document to the Ocean Bank. Now what will
Ocean Bank Ltd do with this presentation:
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a. Negotiate
b. Honour
c. Forward the document to the issuing bank
d. Fulfill confirming bank’s obligation through negotiate
Which of the following credit availability can be suitable for a credit without requirement of a
draft :
i. By Payment
ii. BY Acceptance
iii. By Deferred Payment
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iv. By Negotiation
a. iv only
b. ii only
c. i and iii only
d. i, iii and iv
Credit available with a confirming bank calls for sight draft drawn on it, then the credit is available
by:
a. payment
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b. acceptance
c. deferred payment
d. negotiation
Which of the credit “available by” is/are only used for sight basis at Issuing Bank’s counter:
i. By Payment
ii. By Negotiation
iii. By Acceptance
15 iv. By Deferred Payment
a. i and ii
b. i only
c. ii only
d. iii and iv
16 Honour means:
i. making payment by Issuing bank in case of credit available with it payment, by deferred
payment and by acceptance
ii. advancing fund by the nominated bank under a complying presentation
iii. making payment by the issuing bank in case of credit available with the nominated bank
by negotiation but nominated bank did not negotiate
iv. making payment by the issuing bank in case of credit available with the nominated bank
by payment but nominated bank did not pay at sight
 a. i only
b. iii and iv only
c. i, iii and iv
d. All of the above
Credit can be available with the nominated bank:
i. By payment
ii. By acceptance
iii. By negotiation
17 iv. By deferred payment
a. i and ii
b. i, ii and iv
c. iii only
d. All of the above
Under a documentary credit, who are obligated to the beneficiary:
i. Issuing bank
ii. Confirming bank
iii. Nominated bank from the time of issuance of the credit
18 iv. Nominated bank who gives express consent and communicate it to the beneficiary
a. i and ii only
b. i only
c. i, ii and iv
d. All of the above
A customer of your bank, who is the beneficiary of a documentary credit available by negotiation
and confirmed by your bank, presents a set of documents to you. The payment is due 90 days
after the date of shipment. The beneficiary asks you to advance funds to it. If the documents meet
the requirements of the documentary credit, what is this type of negotiation?
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a. Negotiation under reserve.
b. Negotiation at sight.
c. Negotiation with recourse.
d. Negotiation without recourse.
Under a usance negotiation credit, when may a nominated bank act on its nomination?
a. Only at the time of determining that the documents comply.
b. Only on the maturity date.
c. At any time between determining that the documents comply and the date on which
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payment is due to the beneficiary and reimbursement is expected from the issuing
bank.
d. At the time when the issuing bank provides the nominated bank with its advice of
acceptance of the documents.