Exam on Module 2

Name:

01 Which of the following options is correct under a credit “available by” with a requiring draft drawn on an issuing Bank:
i. Payment
ii. Deferred Payment
iii. Acceptance
iv. Negotiation.
a. i and ii only
b. ii and iii only
c. i and iii only
d. iii and iv only
02 A Documentary credit calls for a draft at 95 days bill of lading date drawn on confirming bank. The documentary credit
is available by:
a. Payment
b. Deferred Payment
c. Acceptance
d. Negotiation
03 If an applicant requests that the documentary credit expires for presentation at the issuing Bank with a draft drawn on
the issuing Bank & the credit is for 90 days after sight, How should the documentary credit is made available?
a. Payment
b. Deferred Payment
c. Acceptance
d. Negotiation
04 A credit could be made available with Issuing Bank in the following modes EXCEPT:
i. Sight
ii. Acceptance
iii. Deferred Payment
iv. Negotiation
a. i & ii only
b. iii only
c. iv only
d. i & iv only
05 Under which credit availability,A credit can be issued both for the tenor: sight and usance?
a. By Acceptance
b. By Negotiation
c. By deferred payment
d. By payment
06 Which of the following statements are correct? A documentary credit is issued in accordance with UCP 600 if available
with:
i. any bank by deferred payment, no drafts required.
ii. the nominated bank by acceptance, term drafts drawn on the issuing bank
iii. the issuing bank by negotiation, drafts drawn on the issuing bank
iv. the issuing bank by acceptance, term drafts drawn on the issuing bank
a. i and iv
b. ii and iii
c. iii and iv
d. ii and iv
 07 A credit available with any bank by negotiation. Credit is confirmed by XXX bank limited. Beneficiary made its
complying presentation to YYY Bank but it refuse to negotiate the bill. Upon request of the beneficiary, YYY Bank
forwarded document to the XXX Bank. What does XXX bank do with this presentation:
a. Honour
b. Negotiation
c. Forward document to the issuing Bank
d. Fulfill confirming Bank’s obligation through negotiate
08 Which of the following statement is INCORRECT?
a. A credit available with confirming bank requiring a 90 days draft drawn on the confirming bank must be
available by ‘acceptance’ only.
b. A credit available with confirming bank requiring a 90 days draft drawn on the issuing bank must be available
by ‘negotiation’ only.
c. A credit available with a nominated bank requiring no draft but payment to be made 90 days from the date of
BL must be available by ‘deferred payment’ only.
d. A credit available with the issuing bank requiring a draft drawn on it for 90 days from the date of BL must be
available by ‘acceptance’ only.
09 A credit is available with a nominated bank by acceptance. Which of the following statement is correct?
i. The nominated bank will require authorization from the issuing bank before prepay or purchase the bill
ii. The nominated bank is automatically authorized from the issuing bank to prepay or purchase the bill
iii. The nominated Bank is obligated to prepay or purchase the bill
iv. The nominated Bank may prepay or purchase the bill
a. i and iii
b. ii and iii
c. ii only
d. ii and iv
10 Which of the following credit availability can be suitable for a credit without requirement of draft
i. By Payment
ii. By Deferred Payment
iii. By Acceptance
iv. By Negotiation
a. iv only
b. ii and iv
c. i, ii and iv
d. ii only
11 Credit available with a confirming bank calls for sight draft drawn on it, then the credit is available by:
a. Payment
b. Acceptance
c. Negotiation
d. Deferred payment
12 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 deferred Payment
iv. By Acceptance
a. i only
b. i and ii
c. ii only
d. iii and iv only

13 Honour means:
 i. making payment by the issuing bank in case of credit available with it by 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 didn’t negotiate
iv. making payment by the issuing bank in case of credit available with the nominated bank by payment but
nominated bank didn’t pay at sight
a. i only
b. i and iii
c. i, iii and iv
d. all of the above
14 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 credit
iv. nominated bank who give express consent and communicate it to the beneficiary
a. i and ii
b. i only
c. i,ii and iv
d. All of the above
15 Credit can be available with the issuing bank
i. By payment
ii. By deferred payment
iii. By Acceptance
iv. By Negotiation
a. i & ii
b. i and ii
c. i, ii and iii
d. All of the above
16 Credit can be available with the confirming bank
v. By payment
vi. By deferred payment
vii. By Acceptance
viii. By Negotiation
a. I & ii
b. I and ii
c. I, ii and iii
d. All of the above
17 Credit can be available with the nominated Bank
ix. By payment
x. By deferred payment
xi. By Acceptance
xii. By Negotiation
a. i & ii
b. i and ii
c. i, ii and iii
d. All of the above

18 Which of the following statement(s) is/are correct in respect to credit available with the confirming bank by
 negotiation
i. Confirming bank is obligated to negotiate a complying presentation
ii. Confirming bank’s negotiation must be with recourse
iii. Confirming bank’s negotiation must without recourse
iv. Confirming bank’s negotiation may be without recourse
a. i and ii
b. i and iii
c. i,iii and iv
d. i and iv
19 Which of the following statement(s) is/are correct in respect to credit available with the nominated bank by
negotiation
i. nominated bank is not obligated to negotiate a complying presentation
ii. nominated bank’s negotiation must be with recourse
iii. nominated bank’s negotiation must without recourse
iv. nominated bank’s negotiation may be without recourse

a. i and ii
b. i and iii
c. i and iv
d. i ,ii and iv
20 What does negotiation mean:
i. purchase by the issuing bank draft drawn on it
ii. purchase by the nominated bank where credit available with it by negotiation
iii. purchase by the confirming bank where credit available with another nominated bank by negotiation
iv. purchase by the confirming bank where credit available with it by negotiation
a. ii only
b. ii and iii
c. ii, iii and iv
d. ii and iv
21 A nominated bank can “prepay or purchase” under credit available by:
a. negotiation
b. negotiation and acceptance
c. acceptance and deferred payment
d. negotiation, acceptance and deferred payment
22 Which of the following statement is correct under a credit available by payment with a nominated bank, EXCEPT
a. Nominated bank will pay to the beneficiary either by debiting issuing bank account maintained with it or
claim reimbursement from a third bank as per credit
b. Beneficiary will get payment on without recourse basis
c. Nominated Bank will make payment after deducting its charges and interest to the beneficiary
d. Nominated Bank will make payment after deducting its charges to the beneficiary
23 Which of the following statement is not correct under a credit available by negotiation
a. Nominated Bank can negotiate with or without recourse
b. Confirming bank can negotiate with or without recourse
c. Issuing bank cannot negotiate
d. Confirming bank can negotiate only on without recourse

24-28 Credit availability

Your Customer approaches you with a sales contract to discuss regarding various terms and conditions. There are
several conditions on the contract. Out of which the followings are subject to discussion:
a) Shipment will only be effected under irrevocable letter of credit.
b) The credit must ask for draft.
c) The credit must be available at beneficiary’s country and freely available.
d) Payment will be effected within 180 days from the date of Bill of lading.
e)
If it is your responsibility to open a documentary credit on behalf of your customer,

24. How credit can be freely available by at the beneficiary country?

a. Either by negotiation or By acceptance
b. Either by negotiation or By deferred payment
c. Either by payment or by deferred payment
d. Wither by payment or by negotiation.

25. If you choose to made credit available by negotiation, what reimbursement clause is best suit to your
credit?
a. Claim from named reimbursement bank at maturity.
b. Authority to debit Issuing Bank account at maturity.
c. Issuing Bank will remit fund according to instruction.
d. Any one of the above.

26. If you choose to made credit available by negotiation, who will be the possible drawee Bank?
a. Issuing Bank
b. Nominated Bank
c. The Applicant
d. None of the above

27. If the condition no.(c) has been omitted, How credit can be available at the counter of the issuing bank?
a. By Payment
b. By Deferred Payment
c. By Acceptance
d. By Negotiation.

28. In condition no. (d) has been replace by “payment will be effect on sight basis”, How credit can be
available at the counter of the issuing bank?
a. By Payment
b. By Deferred Payment
c. By Acceptance
d. By Negotiation