Thursday 16 January 2014

CDCS SAMPLE TEST 04 / 25 with Answers


Test : CDCS/4                                                                        


1. On 03 January XXXX an irrevocable documentary credit for USD 500,000.00 is confirmed. On 17 January XXXX the confirming bank receives an amendment cancelling the documentary credit which it advises to the beneficiary. As at 18 January XXXX, what is the liability of both banks?

A Issuing and confirming bank – USD 0.00.
B Issuing and confirming bank USD 500,000.00.
C Issuing bank – USD 0.00 Confirming bank – USD 500,000.00.
D Issuing bank – USD 500,000.00 Confirming bank – USD 0.00.


2. In revolving credits where reinstatement is dependent on value, which of the following controls of operations risk are required?

a)         Restrict negotiation to a nominated bank
b)         Restrict the overall drawing value
c)         Restrict the individual shipment/drawing value
d)         All of the above


3. Bill of exchange is required in case of following

a)         Documents against payment
b)         Documents against acceptance
c)         When L/c is available by acceptance
d)         B & C


4.  Freely available credit means

a)         Credit issued without collecting any charges from the applicant
b)         Credit available with nominated bank and issuing bank
c)         Credit available with any bank
d)         None of the above


5.         In a freely available L/c, which of the following statements is true?

A.        Documents must be presented to the advising bank only
B.        Documents can be presented to any bank and it is obliged to                        negotiate
C.        Documents can be presented to any bank and it is not obliged to                    negotiate
D.        Documents can be presented directly to the issuing bank

1.         A only
2.         A & D
3.         B & D
4.         C & D

6. A sea way bill is a non negotiable document, but is it a document of title?

a.         Yes
b.         No


7. A cumulative revolving L/c is issued for USD 10000, the L/c value is reinstated upon
every drawing. The L/c is valid for a period of one year. What is the maximum liability of the issuing bank?

a.         USD 10000
b.         USD 120000
c.         USD 360000
d.         Cannot be determined


8. 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



9. Bank A issues a letter of credit and nominates Bank B as the negotiating bank. When does Bank B assume the credit risk of Bank A?

1.         When bank B add confirmation to the L/c
2.         When bank B negotiates compliant documents under the 
            unconfirmed L/c
3.         When bank A issues the L/c nominating bank B as the 
            negotiating bank
4.         When the bank B forwards compliant documents to Bank A without                 negotiating

a.         1 only
b.         1 & 2
c.         3 only
d.         3 & 4


10. A documentary credit which allows partial shipments has the following shipment schedule:

1,000 units to be shipped between 01 June XXXX and 30 June XXXX
2,000 units to be shipped between 01 July XXXX and 31 July XXXX
2,000 units to be shipped between 01 August XXXX and 31 August XXXX
3,000 units to be shipped between 01 September XXXX and 30 September XXXX

The beneficiary shipped the goods and presented documents as follows:

1. 1,000 units shipped on 15 June XXXX documents presented on 
    30 June XXXX
2. 3,000 units shipped on 15 July XXXX and presented on 28 July XXXX
3. 2,000 units shipped on 31 July XXXX and presented on 15 August XXXX
4. 3,000 units shipped on 15 September XXXX and presented on 30 September XXXX

Which of the above sets of documents are complying?
A 1 only.
B 3 only.
C 1 and 4 only.
D 1, 2 and 4 only.




Answers:


1.         B
2.         D
3.         D
4.         C
5.         4
6.         B
7.         D
8.         A
9.         A
10.       A

CDCS SAMPLE TEST 03 / 25 with Answers

Test : CDCS/3                                                                         

   
1. Which of the following is not suitable for when FCA term is used?
      
a)         on board bill of lading
b)         tax invoice
c)         forwarder’s cargo receipt
d)         packing list

2.         Which of the following statements about bills of exchange are correct
      
a)         they are used as instruments to extend long term credit
b)         they are used as a security for payment
c)         they are used as instruments to extend short term credit
d)         they are used only in international trade

1.         A & B
2.         B & C
3.         C & D
4.         A & D

3.         Which of the following is NOT true about holder in due course

a)         their rights are affected by disputes in rights and wrongs of the commercial 
            contract
b)         they acquire their right to claim payment through endorsement and delivery
c)         they must have taken the instrument in good faith
d)         they  must have taken the instrument without knowledge of any defects in title

5.         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

6.         A documentary credit is a irrevocable undertaking

a)         enforceable against a reimbursing bank even if issuing bank is unable to pay
b)         enforceable against the applicant even if issuing bank is unwilling to pay
c)         enforceable against the nominated bank even if issuing bank is unwilling 
            to pay
d)         enforceable against the issuing bank even if the confirming bank is unwilling 
            to pay

7.         An employee of a nominated bank making payment to a beneficiary 
            under a documentary credit should be aware

            a) The extent to which their bank has agreed to act in its role of nominated 
                 bank
            b) An indemnity has been provided, if the presentation is discrepant
            c) Whether the beneficiary has a separate negotiation facility
            d) Whether any shipment guarantee have been issued under the credit

a.         A&B
b.         A&C
c.         A,C&D
d.         A,B&C

8.         Which documentary credit enables a beneficiary to obtain pre-shipment financing 
            without impacting his facility?

A.         Transferable
B.         Red Clause
C.         Irrevocable, payable at sight
D.         Confirmed irrevocable, payable at maturity

9. 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 forwarding agent ?

a)         1 and 3 only
b)         2 and 4 only
c)         1,2 and 3 only
d)         2,3 and 4 only

10. 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?

A.         USD 112,500
B.         USD 135,000
C.         USD 157,500
D.         USD 180,000

11.       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.         Transferable
B.         Revolving
C.         Standby
D.         Evergreen

12.  Select the most appropriate statement

a.         The issuing bank must use an advising bank
b.         The issuing bank may use an advising bank
c.         There must be at least two banks in a L/c operations
d.         None

13.       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

14. A cumulative revolving documentary credit is opened with six months' validity and allowing for USD 25,000.00 to be drawn each month. If only the first month's shipment is effected in full, what is the available amount in the fourth month?

A.         USD 0.00.
B.         USD 25,000.00.
C.         USD 75,000.00.
D.         USD 100,000.00

15.       Applicant in his instructions to issue a documentary credit should specify

a)         Terms and conditions which the beneficiary has to comply with to obtain payment under the               sales contract
b)         Terms and conditions which the beneficiary has to comply with to obtain payment under the               documentary credit
c)         Documents to be produced to obtain payment under the documentary credit
d)         All the relevant terms and conditions of the sales contract

1.         A & D
2.         B & C
3.         B, C & D
4.         B & D


Answers

1.         A
2.         B
3.         A
4.         D
5.         B
6.         D
7.         D
8.         B
9.         C
10.       C
11.       C
12.       B
13.       B
14.       C
15.       B


Wednesday 15 January 2014

CDCS SAMPLE TEST 02 / 25 with Answers

Test: CDCS/2                                                                       
  
1. Buyer is exposed to the following risks under Advance 
Payment Method

                 a) Country risk of seller
                 b) Seller’s bank risk
                 c) Seller credit risk
                 d) Country risk of buyer

(1)   A&D
(2)   A&C
(3)   A,C&D
(4)   A,B,C&D

2. Which of the following is a reason for adapting advance payment terms
      
a)      two companies have a long established trading relationship
b)      buyer wishes to engage the seller in a long term relationship
c)      seller is confident with the buyer’s country risk
d)     none of the above

3. Which of the following is NOT a reason for adapting open account terms

a)      Two companies have a long established trading relationship
b)      Buyer wishes to engage the seller in a long term relationship
c)       Lesser banking fees
d)      Seller is confident with the buyer’s country risk

4. 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?

  1. CIF London
  2. FAS London
  3. CIF New York
  4. FAS New York

5.What is the applicable Incoterm for an Airway Bill marked “freight prepaid”?

  1. FCA
  2. CFR
  3. CPT             D.DAF

6. Which of the following is NOT a characteristic of DES?

a)      Contract of carriage will be between the seller and the carrier
b)      Seller is responsible for loading and unloading costs
c)      Risk of  loss / damage to the goods between port of loading and port of discharge is for seller’s account
d)     Buyer is responsible for obtaining import clearance


7. Quality export Inc enters into an agreement with Excel Exim Ltd to ship footwear from India to USA. The incoterm specified in the contract is FCA Chennai. Excel Exim Ltd has nominated reliable shipping as the carrier. Which of the following statements is FALSE?

a)      Quality Export Inc must deliver the goods to the carrier premises unloaded from the arriving means of transport
b)      If the goods are picked from reliable shipping from Quality Export Inc’s premises. Quality Export Inc is responsible for loading the goods into carrier’s means of transport
c)      Contract for carriage will be between Excel Exim Ltd and reliable shipping
d)     Risk of damage to the goods after they are delivered to reliable shipping will be for the account of Excel Exim Ltd 
8 . Y
8 . Your customer advises you that they have concluded an export sale contract with an overseas buyer. The buyer’s country is highly volatile and subject to frequent strikes by pot workers, factories, civil servants and bank staff. What is the best way for a customer to cover themselves regarding this sale

a)      Send documents on collection basis and instruct the collecting bank to release documents against payment
b)      Trade on CIF terms and arrange for an insurance cover that includes Institute Cargo Clause (A) and Institute Strike Clauses
c)      Secure payment through an irrvocable documentary credit confirmed by you.
d)     Any of the above

9. ABC Co. has entered into a contract with XYZ Ltd to ship Iron Ore from Chennai to Busan. The incoterms specified in the contract is CFR Busan. ABC Co’s mine I located 100kms. Which of the following statement correctly reflects the risks & responsibilities of ABC Co & XYZ Ltd/

a)      Risk of loss / damage to the goods after they are loaded on the trucks is for XYZ Ltd’s account
b)      Risk of loss / damage to the goods till the vessel reaches Busan is for ABC Co’s account
c)      Risk of loss / damage to the goods while they are being unloaded in Busan is for the account of XYZ Ltd
d)     ABC Co is responsible for arranging the vessel if the shipment is to be effected by charter party
  
10. Your customer has entered into a contract with an overseas buyer to ship goods on CPT basis. Shipment will be made for the customer’s welfare to port by trucks and from the port to buyer’s country by sea. Your ustomer will be using two different carriers (one for road and another for sea) to effect the shipment. Which of the following are statements is TRUE?

           a)      Your customer must pay the freight charges of first carrier only
b)      Your customer must pay the freight charges of both the carriers
c)      Risk of loss / damage during voyage is transferred to the buyer, when your customer deliveries the goods to the first carrier
d)     Risk of loss / damage during voyage is transferred to the buyer when the goods are delivered to the second carrier by the first carrier
(1)   A&C
(2)   B&C
(3)   A&D
(4)   B&D.

 11.Which of the following statements is TRUE regarding incoterms?

A.    Seller is not responsible for unloading in DEQ
B.     DAF is suitable only for overland transportation
C.     Seller should arrange for maximum possible insurance cover in CIF
D.    DDP is not suitable for transportation by sea


12.Company A (in country X) agrees to sell grade no. 2 Agrentine yellow corn to company B (in country Y) on CFR basis. Company A charters a vessel to ship goods from country X to country Z. However, before the payment is settled the companies enter into a dispute regarding the quality of corn shipped. The sales contract between the companies specifies that in case a dispute law of the country where the goods are to be delivered will apply. Which country’s law is more likely to be applied

A.    Country X
B.     Country Y
C.     Country Z
D.    Any of the above

13. Great Exporters Ltd, India enters into a contract with Food Imports S.A France to sell Basmati rice. The contract is signed under FAS terms. However, the contract does not specify any detail on who is responsible for obtaining export clearance and packing the goods. Which of the following statements is true?

A.    Great exporters ltd is responsible to obtain export clearance
B.     Great Exporters Ltd is not responsible for packing as it is not stated in the contract
C.     Food imports SA is responsible for export clearance
D.    Great Exporters Ltd is responsible for packing the goods if it is customary to   
                  do so

  
14. Match the following
      
                            a)  DEQ          -Transfer of risks at port of discharge
                            b)  DDU          -Unloading cost borne by seller
                            c)  CFR           -Import clearance by buyer
                            d)  DES           -Transfer of risk at port of loading

    
 15. Your customer has approached a manufacture to buy 1000 pairs of shoes, 
the various prices  quoted by the manufacture are as follows
          
                               EXW – 10000
                                           FOB –  10500
                                           CIF –    11500
                                           DDP –  13000

 16. Your customer has checked independently and received the following quotes for the same   shipment they are : 

All licensing and loading costs ( in exporting country ) – USD 500
Main Carriage cost – USD 1000
Minimum insurance cover – USD 500
Unloading costs, inland transport ( in importer’s country ) and import
duties –USD 1500

What quote of the exporter your customer should accept?

a)      EXW
b)      FOB
c)      CIF
d)     DDP

 16)Which of the following incoterms is correctly described?

 Incoterms             Insurance Doc.                   Transport Doc.
       DDP                     Required                            Marked Freight Paid
       CFR                     Required                            Marked Freight Collect
       FOB                     Not required                       Marked Freight paid
       FAS                      Not required                       Marked Freight Collect

 Answers:

1.      2
2.      B
3.      B
4.      D
5.      C
6.      B
7.      A
8.      C
9.      C
10.  2
11.  B
12.  A
13.  3
14.  D,A,B,C
15.  D
16.  D

Tuesday 14 January 2014

CDCS SAMPLE TEST 01 / 25 with Answers

Test : CDCS/1            Name:

A container is loaded in the town of Shenzhen and trucked to Yantian port where it is loaded on board a ocean vessel to Hamburg. Then reloaded onto a feeder vessel and discharged in Copenhagen port. After arriving Copenhagen port container is trucked to consignees warehouse in the town of Roskilde. Finally goods are costumed cleared and ready to use or sell.

1. What is the correct town/port to use after INCOterm EXW for above scenario?

a) EXW Shenzhen
b) EXW Yantian
c) EXW Roskilde

2. What is the correct town/port to use after INCOterm FCA for above scenario?

a) FCA Copenhagen
b) FCA Yantian
c) FCA Roskilde

3. What is the correct town/port to use after INCOterm FOB for above scenario?

a) FOB Shenzhen
b) FOB Yantian
c) FOB Hamburg

4. What is the correct town/port to use after INCOterm CFR for above scenario?
a) CFR Yantian
b) CFR Hamburg
c) CFR Copenhagen

5. What is the correct town/port to use after INCOterm CIF for above scenario?
a) CIF Yantian
b) CIF Hamburg
c) CIF Copenhagen

6. What is the correct town/port to use after INCOterm DDU for above scenario?
a) DDU Roskilde
b) DDU Copenhagen
c) DDU Shenzhen

7. What is the correct town/port to use after INCOterm DDP for above scenario?
a) DDP Shenzhen
b) DDP Copenhagen
c) DDP Roskilde

8. When using INCOterm EXW Shenzhen what part of the freight has shipper paid?
a) Export documents and loading of container
b) Trucking from Shenzhen to Yantian
c) Nothing

9. When using INCOterm FCA Shenzhen what part of the freight has shipper paid?
a) Loading of container
b) Export documents and loading of container
c) Nothing

10. When using INCOterm FCA Yantian what part of the freight has shipper paid?
a) Export documents and loading of container
b) Export documents, loading of container and trucking to Yantian port
c) Export documents, loading of container, trucking and origin Terminal Handling Charges in Yantian port

11. When using INCOterm FOB Yantian what part of the freight has shipper paid?
a) All local charges until cargo is delivered to Yantian port
b) All local charges until cargo passes ships rail at Yantian port

12. When using INCOterm CFR Copenhagen what part of the freight has shipper paid?
a) Freight from loading Shenzhen until cargo is delivered in Copenhagen port
b) Freight and insurance from loading Shenzhen until cargo passes ships rail in Copenhagen port
c) Freight from loading Shenzhen until cargo passes ships rail in Copenhagen port

13. When using INCOterm CIF Copenhagen what part of the freight has shipper paid?
a) Freight and insurance from loading Shenzhen until cargo passes ships rail in Copenhagen port
b) Freight and insurance from loading Shenzhen until cargo is delivered in Copenhagen port
c) Freight from loading Shenzhen until cargo passes ships rail in Copenhagen port

14. When using INCOterm DDU Roskilde what part of the freight has shipper paid?
a) All freight charges until cargo is delivered and customs cleared to Roskilde
b) All freight charges until cargo is delivered but not customs cleared to Roskilde
c) All freight charges until cargo is delivered to Roskilde and duty paid

15. When using INCOterm DDP Roskilde what part of the freight has shipper paid?
a) All freight charges until cargo is delivered to Roskilde and duty and VAT paid
b) All freight charges until cargo is delivered to Roskilde and duty paid
c) All freight charges until cargo is delivered to Roskilde and VAT paid


Key
1. A
2. B
3. B
4. C
5. C
6. A
7. C
8. C
9. B
10. B
11. B
12. C
13. A
14. B
15. B