1. Chapter Wise Practice Question By: Muhammad Iqbal Siddiqui

2. Discrepant documents under a LC are received by the nominated bank. The nominated bank requests the issuing bank for authority to pay. Which of the following is the BEST course of action for the issuing bank? A. If the discrepancies are acceptable to the issuing bank, the issuing bank need not refer the discrepancies to the applicant B. The issuing bank should refer the discrepancies to the applicant for their approval. C. The issuing bank must reply to the nominated bank within 5 banking days following the date of receipt of such request D. An issuing bank need not check documents for compliance if it authorizes the nominated bank to pay B. The issuing bank should refer the discrepancies to the applicant for their approval Chapter 1 2 By: Muhammad Iqbal Siddiqui

3. What triggers settlement under a documentary credit? a. evidence of shipment of the goods; b. letter of introduction; c. handing over of the documents to an applicant; d. presentation of complying documents by the beneficiary. Chapter 1 The correct answer is d. It is only when a complying presentation is made to a nominated bank, confirming bank or issuing bank that honour or negotiation may or will take place. See UCP 600 sub-articles 7 (a) and 8 (a), and article 12. 3 By: Muhammad Iqbal Siddiqui

4. Who is it that undertakes to make payment under a documentary credit? a. The applicant. b. The advising bank. c. The issuing bank. d. The nominated bank. Chapter 1 The correct answer is c. It is the issuing bank that undertakes to honour a complying presentation that is made by or on behalf of the beneficiary. See UCP 600 sub-article 7 (a). 4 By: Muhammad Iqbal Siddiqui

5. Which one of the following is not a party to a documentary credit? a. The confirming bank. b. The beneficiary. c. The applicant. d. The issuing bank. Chapter 1 The correct answer is c. An applicant is not a party to a documentary credit. A documentary credit constitutes an undertaking of a bank (issuing bank) and once issued cannot be amended or cancelled without the agreement of the beneficiary. 5 By: Muhammad Iqbal Siddiqui

6. Name the main purpose of a documentary credit. a. To undertake payment to a beneficiary. b. To give shipping instructions to a beneficiary. c. To eliminate risk in performance under the purchase or sale contract. d. To ensure the applicant receives transport documents. Chapter 1 The correct answer is a. The documentary credit acts as an undertaking addressed to the beneficiary and removes the payment risk of the applicant. 6 By: Muhammad Iqbal Siddiqui

7. Which of the following settlement types are associated with the definition of ‘honour’? A. Payment. B. Acceptance. C. Deferred payment. D. Negotiation. Options: a. A, C and D b. A, B and C c. A, B and D d. B, C and D Chapter 1 The correct answer is b. UCP 600 article 2 defines ’honour’ as ’to pay at sight if the credit is available by sight payment’; ’to incur a deferred payment undertaking and pay at maturity if the credit is available by deferred payment’; and ’to accept a bill of exchange ("draft") drawn by the beneficiary and pay at maturity if the credit is available by acceptance’. 7 By: Muhammad Iqbal Siddiqui

8. Which of the following statements about bill of exchange are correct? I. They are used as instruments to extend long term credit II. They are used as security for payment III. They are used as instruments to extend short term credit IV. They are used only in international Trade Options: A. I and II B. II and III C. III and IV D. I and IV The correct answer is B B. II and III Chapter 2 8 By: Muhammad Iqbal Siddiqui

9. An applicant should apply for a letter of credit I. As detailed in the agreement between the applicant and beneficiary II. Before the latest shipment date specified in the credit III. Before the expiry date specified in the credit IV. As detailed in the agreement between the applicant and issuing bank Options: A. I and II B. II and III C. I, II and III D. II, III and IV The correct answer is “C” C. I, II and III Chapter 2 9 By: Muhammad Iqbal Siddiqui

10. What is the difference between a bill of exchange and a promissory note? A. A bill of exchange is drawn by the seller, while promissory note is drawn by the buyer B. A bill of exchange is conditional upon fulfillment of the commercial contract, while promissory note is not C. A promissory note is conditional upon fulfillment of the commercial contract, while bill of exchange is not D. A bill of exchange is a financial documents whereas a promissory note is a commercial document The correct answer is “A” A. A bill of exchange is drawn by the seller, while promissory note is drawn by the buyer Chapter 2 10 By: Muhammad Iqbal Siddiqui

11. Which of the following Incoterms is SUITABLE for all forms of transport ? A. Cost and Freight B. Free Alongside ship C. Delivered at Terminal D. Free On Board The correct answer is “C” C. Delivered at Terminal Chapter 2 11 By: Muhammad Iqbal Siddiqui

12. Which of the following detail is NOT a must in a bill of exchange ? A. Drawee B. Tenor C. Currency & Amount D. Drawer’s endorsement The correct answer is “D” D. Drawer’s endorsement Chapter 2 12 By: Muhammad Iqbal Siddiqui

13. Which of the following statement regarding forfaiting are TRUE? I. It is an arrangement between by means of which the seller receives payment for export receivables from the lender without recourse II. It is a device used for long term financing III. Rights to payment under letters of credit are accepted as security IV. It is a guarantee given by the lender to pay the seller in case the buyer defaults Options: A. I and II B. I and III C. I, II and III D. II, III and IV The correct answer is “B” B. I and III Chapter 2 13 By: Muhammad Iqbal Siddiqui

14. A credit which calls for a draft at “10 days after shipment”, requires shipment from “Any Indian Port”. One B/L is presented showing two onboard notations. “On board vessel A 01 April XX from Kolkatta” and “On board vessel B 03 April XX from Chennai” (Kolkatta and Chennai are both ports in India). The maturity date of the draft is: A. 10 April XX B. 11 April XX C. 12 April XX D. 13 April XX The correct answer is “B” B. 11 April XX Chapter 2 14 By: Muhammad Iqbal Siddiqui

15. Which of the following is TRUE about the Incoterms CFR? A. Transfer of risk occurs at the port of loading B. The buyer enters into the contract of carriage with the main carrier C. The seller pays unloading cost if separate from the main carriage cost D. The term can be used for all modes of transport The correct answer is “A” A. Transfer of risk occurs at the port of loading Chapter 2 15 By: Muhammad Iqbal Siddiqui

16. Which of the following is NOT a risk to a beneficiary with regard to an unconfirmed credit? A. Failure to comply with credit conditions B. Insolvency of issuing bank C. Loss of goods in transit D. None of the above The correct answer is “C” C. Loss of goods in transit Chapter 2 16 By: Muhammad Iqbal Siddiqui

17. In a L/C calling for a Bill of Lading on CFR basis, which of the following is acceptable A. Shipped on board with freight pre-payable B. Shipped on board with freight to be paid C. Shipped on board with freight prepaid and destination charges collect D. Received for shipment with freight prepaid and destination charges to pay The correct answer is “C” C. Shipped on board with freight prepaid and destination charges collect Chapter 2 17 By: Muhammad Iqbal Siddiqui

18. The correct answer is “C” To receive payment in advance removes all payment risk from the beneficiary. Your customer is an exporter. Which payment term exposes it to least risk? a. Open account. b. Documentary credit. c. Payment in advance. d. Documentary collection. Chapter 2 18 By: Muhammad Iqbal Siddiqui

19. The correct answer is “A” In an open account transaction, an importer is not required to make any payment until the goods and documents are received by it. Your customer is an importer. Which payment term exposes it to least risk ? a. Open account. b. Documentary credit. c. Payment in advance. d. Documentary collection. Chapter 2 19 By: Muhammad Iqbal Siddiqui

20. The correct answer is “A” In an FOB transaction, freight will be payable at destination (by the importer); in a CIF transaction, freight will be paid before shipment (by the exporter). An exporter sells goods overseas on FOB and CIF Incoterms respectively. Who is responsible for the freight charges in each ? a. Importer (FOB) / exporter (CIF). b. Importer (FOB) / importer (CIF). c. Exporter (FOB) / importer (CIF). d. Exporter (FOB) / exporter (CIF). Chapter 2 20 By: Muhammad Iqbal Siddiqui

21. The correct answer is c. UCP 600 article 20 requires that a bill of lading indicate that the goods have been shipped on board. Under FOB terms, the bill of lading will be marked freight payable at destination. Under FOB terms and the UCP, a bill of lading would be required to state: a. shipped on board and freight paid; b. received for shipment and freight paid; c. shipped on board and freight payable at destination; d. received for shipment and freight payable at destination. Chapter 2 21 By: Muhammad Iqbal Siddiqui

22. The correct answer is b. The definition of CIF in Incoterms 2010 is that it stands for the [C]ost of goods, [I]nsurance of the goods and the [F]reight cost for the goods. Incoterm CIF means: a. carriage, insurance and freight; b. cost, insurance and freight; c. cost including freight; d. charges, insurance and freight. Chapter 2 22 By: Muhammad Iqbal Siddiqui

23. A credit issued for USD 20,000 is to revolve on a cumulative basis every month for 6 months. What is the total liability of the issuing bank ? A. USD 20,000 B. USD 20,000 for each month C. USD 120,000 D. Indeterminable C. USD 120,000 Chapter 3 23 By: Muhammad Iqbal Siddiqui

24. When a bank wants to reduce its risk in a documentary credit transaction, it should A. Confirm the LC B. Request another bank to add confirmation C. Issue a standby D. Enter into an syndication agreement Correct Answer is Option “D” D. Enter into an syndication agreement Chapter 3 24 By: Muhammad Iqbal Siddiqui

25. Extract from a LC: Beneficiary: ABC Co, Taiwan Documents required: 1. Certificate of Origin issued by the manufacturer 2. Inspection Certificate issued by a competent authority in the exporting country The beneficiary presented the following documents: I. Certificate of origin issued by a Chamber of Commerce mentioning the name of the manufacturer II. Inspection Certificate issued by XYZ Co in China III. Invoice showing manufacturer as XYZ Co, China Options: A. Documents I and II are not acceptable B. Documents I and II are acceptable C. Document I is acceptable but II is not D. Document II is acceptable but I is not Correct Answer is Option “B” B. Documents I and II are acceptable Chapter 3 25 By: Muhammad Iqbal Siddiqui

26. Your client (the beneficiary) received the following amendment: - LC amount is decreased from US$ 100,000 to US$ 90,000 - Inspection Certificate is required from SGS instead of Ministry of Agriculture What options does your client have in terms of document presentation? A. Reject the amendment in writing. If not, it is assumed the amendment is acceptable B. Present documents for US$ 100,000 and inspection certificate from SGS C. Present documents for US$ 90,000 and inspection certificate from Ministry of Agriculture D. Present documents for US$ 100,000 and inspection certificate from Ministry of Agriculture Correct Answer is Option “D” D. Present documents for US$ 100,000 and inspection certificate from Ministry of Agriculture. Chapter 3 26 By: Muhammad Iqbal Siddiqui

27. A LC states latest date of shipment as on or about 23 April XX. Which is the latest date by which shipment has to be effected ? A. 23 April XX B. 30 April XX C. 24 April XX D. 28 April XX Chapter 3 27 By: Muhammad Iqbal Siddiqui

28. An irrevocable transferable L/C with following details is issued available with advising bank LC amount – USD 90,000 Quantity – Grade A 400 Pcs @ USD 100, Grade B 500 Pcs @ USD 100 Original L/C requires Insurance Policy for 110 % of invoice value First beneficiary requested the advising bank to issue two partial transfers as follows: Transfer I – Grade A 400 Pcs @ USD 50 Transfer II – Grade B 500 Pcs @ USD 70 Which is the percentage of insurance cover will you mention in each transfer? Transfer I Transfer II A 110% 110 % B 110% 125% C 220% 157.14% D 220% 220% C : 220% 157.14% Chapter 3 28 By: Muhammad Iqbal Siddiqui

29. Under a freely negotiable LC, which of the following statements are TRUE? I. Documents must be presented to the advising bank only II. Documents may be presented to any bank and it is obliged to negotiate III. Documents may be presented to any bank but it is not obliged to negotiate IV. Documents may be presented directly to the issuing bank Options: A. I only B. I and IV C. II and IV D. III and IV Chapter 3 29 By: Muhammad Iqbal Siddiqui

30. A standby subject to ISP 98 is issued with the following clauses: Beneficiary can claim under the standby by presenting a statement of default certifying that applicant has not paid invoices within 60 days after shipment date including invoice no. 123 The beneficiary presents a drawing with the following documents: - Beneficiary’s statement of default which complies with the standby - Copy of unpaid invoice no. 234 As an issuer of the standby, which of the following is your BEST course of action? A. Refuse the presentation as contract reference is different from the standby B. Pay the beneficiary C. Ask beneficiary to change contract reference in the invoice D. Obtain applicant’s approval for payment B. Pay the beneficiary Chapter 3 30 By: Muhammad Iqbal Siddiqui

31. Your client has entered into a contract to purchase machine tools from a producer in a neighboring country. Since the production is a new venture, the producer wants an advance payment to procure raw material to manufacture the tools. Which letter of credit will facilitate this transaction? A. Red clause letter of credit B. Revolving letter of credit C. Evergreen letter of credit D. Installment letter of credit A. Red clause letter of credit Chapter 3 31 By: Muhammad Iqbal Siddiqui

32. If a LC calls for insurance to cover “Common Risks”, the document presented A. Must cover all risks B. Must cover common risks in the trade C. Must cover risks at least as per ICC ( C ) D. Can cover any risk(s) Chapter 3 32 By: Muhammad Iqbal Siddiqui

33. As a nominated bank, you wish to negotiate credit compliant documents from a beneficiary under a sight credit available by negotiation. Which of the following constitutes negotiation? I. Make immediate payment to the beneficiary and send documents to the issuing bank II. Make payment to the beneficiary after receipt of funds from the issuing bank III. Agree to pay the beneficiary after 10 days (you expect to be paid after 14 days) IV. Seek permission from issuing bank t negotiate the documents Options: A. IV only B. II and III C. III only D. I and III Chapter 3 33 By: Muhammad Iqbal Siddiqui

34. A credit requires the beneficiary to send one set of non-negotiable documents within 2 days of shipment. The shipment date is 10 Dec XX. Which of the following dates are ACCEPTABLE? I. 08 December XX II. 13 December XX III. 12 December XX IV. 11 December XX Options: A. I only B. III only C. I, II and IV D. I, III and IV Chapter 3 34 By: Muhammad Iqbal Siddiqui

35. Speed Airways has entered into a contract with your client Green Aircraft Manufacturing Co. to lease an airplane for 10 years. The lease payment is due every six months and will be paid directly by Speed Airways through their bank. Which of the following credits best serves your client’s interest and protects them against the credit risk of Speed Airways? A. Revolving credit B. Installment credit C. Green clause letter of credit D. Evergreen standby letter of credit Chapter 3 35 By: Muhammad Iqbal Siddiqui

36. Your customer imports goods worth £100,000 per annum from the same suppliers in January each year. Instead of buying all goods in January they would like to import goods on a monthly basis. They would like to know if this is possible under a documentary credit. Can you suggest what type of documentary credit will suit their requirements? a. Revocable letter of credit. b. Transferable letter of credit. c. Clean letter of credit. d. Revolving letter of credit. The correct answer is d. What is being described is a revolving credit, ie one that revolves for a similar amount on certain stated conditions. Chapter 3 36 By: Muhammad Iqbal Siddiqui

37. Which type of documentary credit provides a preshipment facility to the beneficiary? a. Irrevocable credit. b. Confirmed credit. c. Red clause credit. d. Revolving credit. The correct answer is c. A credit may provide for the beneficiary to receive an advance payment for part of the credit value. This was traditionally known as a red clause due to the fact that it was typed onto a letter of credit in red ink. Today, with documentary credits being transmitted primarily by SWIFT message, a clause in red ink is not possible but the term is still referred to by many bankers. Chapter 3 37 By: Muhammad Iqbal Siddiqui

38. Which type of documentary credit will overcome the risk to a beneficiary of default by an issuing bank? a. Standby credit. b. Irrevocable credit. c. Confirmed credit. d. Revolving credit. The correct answer is c. By having a documentary credit confirmed by a bank that is local to the beneficiary, it removes the payment risk of the issuing bank and places it with a bank that is well known to the beneficiary and considered to be financially sound. Chapter 3 38 By: Muhammad Iqbal Siddiqui

39. A documentary letter of credit is opened at the request of one of your customers. Is the customer: a. the exporter; b. the beneficiary; c. the importer; d. the drawer? The correct answer is c. The instructing party is the importer or buyer of the goods, services or performance, and they will be known as the applicant. Chapter 3 39 By: Muhammad Iqbal Siddiqui

40. What is the main benefit of an irrevocable documentary credit to the beneficiary? a. Assurance of receipt of goods. b. Assurance of receipt of payment. c. Assurance of importer’s creditworthiness. d. Assurance of issuing bank’s creditworthiness. The correct answer is b. If the beneficiary provides documents that comply with the terms and conditions of the documentary credit, a confirming bank (if any) or an issuing bank will have an obligation to honour or negotiate. Chapter 3 40 By: Muhammad Iqbal Siddiqui

41. A correspondent bank to the issuing bank has not committed to make payment on behalf of the issuing bank. In this circumstance, the correspondent bank is acting as: a. nominated bank; b. confirming bank; c. advising bank; d. advising, nominated and confirming bank The correct answer is a. A nominated bank has no obligation to honour or negotiate under a documentary credit. An advising bank may or may not be a nominated bank See UCP 600 article 12 regarding the role of the nominated bank. Chapter 4 41 By: Muhammad Iqbal Siddiqui

42. Which bank is ultimately responsible for charges under UCP 600? a. The advising bank. b. The confirming bank. c. The issuing bank. d. The nominated bank. The correct answer is c. If the charges of an advising or confirming bank are not recoverable from the beneficiary, the issuing bank remains liable. See UCP 600 article 37. Chapter 4 42 By: Muhammad Iqbal Siddiqui

43. In what circumstances is it not necessary for an advising bank to take further action to check the apparent authenticity of a documentary credit? a. If the documentary credit is received on paper. b. If the documentary credit is received via SWIFT in MT700 format. c. If the documentary credit is received by fax. d. If the documentary credit is received by email. The correct answer is b. An MT700 message is automatically authenticated between the sending and receiving banks. Chapter 4 43 By: Muhammad Iqbal Siddiqui

44. A reimbursing bank has received a reimbursement authorization from the issuing bank. There is no request to issue a reimbursement undertaking to the claiming bank (nominated bank). Despite not issuing a reimbursement undertaking, a reimbursing bank is required to honour a reimbursement claim made by the claiming bank. A reimbursing bank is under no obligation to honour any claim unless a reimbursement undertaking has been issued by it and the claim submitted by the claiming bank is in conformity with that undertaking. Chapter 4 44 By: Muhammad Iqbal Siddiqui

45. Which statement below describes the difference between a documentary credit available by acceptance and one that is available by deferred payment? A documentary credit available by acceptance does not require presentation of a bill of exchange and a documentary credit available by deferred payment requires a bill of exchange. b. A documentary credit available by acceptance requires a bill of exchange to be presented and a documentary credit available by deferred payment does not. c. A documentary credit available by deferred payment can only be issued for usance terms above 60 days, whereas a documentary credit available by acceptance can cover any usance period. d. A documentary credit available by acceptance may be discounted at the request of the beneficiary and a documentary credit available by deferred payment may not be discounted at the request of the beneficiary. The correct answer is b. Acceptance require the placement of an indication of acceptance by the drawee on the face of a draft (bill of exchange). The deferred payment product was developed to cover transactions where a draft was not required or appropriate, ie due to stamp duty fees applying to a draft. Chapter 445 By: Muhammad Iqbal Siddiqui

46. The correct answer is a. The preparation of documents is a task for the beneficiary and other entities that are required to produce documents on their behalf, ie transport and insurance documents. Although some banks provide a document preparation service to their clients, this is not a primary function of a nominated or confirming bank. Which of these is not the responsibility of the nominated bank / confirming bank? a. To prepare documents for presentation. b. To examine documents. c. To handle discrepant documents. d. To advise the beneficiary of any decisions with respect to documents. Chapter 546 By: Muhammad Iqbal Siddiqui

47. The correct answer is b. As a bank has issued a documentary credit, it is that bank’s payment risk that must be considered by the beneficiary. The issuing bank has, effectively, replaced the payment risk of the applicant with its own. Which of these is not a risk faced by a beneficiary in a documentary credit? a. Failure of the issuing bank. b. Failure of the applicant to pay. c. Failure of the beneficiary to prepare compliant documents. d. Failure of the issuer, in the event that the documentary credit is issued by a non-bank. Chapter 5 47 By: Muhammad Iqbal Siddiqui

48. The correct answer is c. This aspect is covered in UCP 600 article 9. Any advising bank is responsible for which of the following? a. Ensuring that the credit or amendment is genuine. b. Honour or negotiation if a complying presentation is made. c. Ensuring that the credit or amendment is apparently authentic. d. Requesting any amendments of the issuing bank on behalf of the beneficiary. Chapter 5 48 By: Muhammad Iqbal Siddiqui

49. A credit issued by Bank A, available with Bank B by Payment included the expiry date as 04 February XX. The beneficiary couriered documents to Bank B on 31 January XX. However on account of a general strike, Bank B was unable to receive and process documents. The beneficiary re-routed the documents directly to Bank A which was received by them on 5th February XX. Which of the following statements reflects Bank A’s position? A. Bank A must pay the beneficiary if documents are credit compliant B. Bank A is not obliged to pay, since the documents were presented after expiry date C. Bank A is not obliged to pay since the documents were not presented through the nominated bank D. Bank A must request the beneficiary to re-present documents to Bank B for payment B. Bank A is not obliged to pay, since the documents were presented after expiry date Chapter 6 49 By: Muhammad Iqbal Siddiqui

50. Which of the following transport document has the capacity to fulfill the three functions listed below? - Evidence receipt of goods by carrier - Evidence the contract of carriage - Convey title to the goods Options: A. Airway Bill B. Seaway Bill C. Truck Receipt D. Marine Bill of Lading Chapter 6 50 By: Muhammad Iqbal Siddiqui

51. Bank I (the issuing bank) received documents on 11 March XX (Tuesday) and found the documents to be discrepant. Which of the following notices sent by Bank I is / are valid? (Saturdays and Sundays are bank holidays) A. MT 799 sent on 14 March XX “We received your documents presented under our LC. However we refuse to pay as the documents are discrepant. Meanwhile we are holding the documents at your disposal B. MT 799 sent on 18 March XX “We refuse your presentation as the documents contain the following discrepancies: Late shipment, Partial shipment. We are returning the documents to you by courier C. MT 799 sent on 13 March XX “We have found that the documents contain discrepancy late shipment. We will effect payment when documents are accepted by the applicant” D. MT 799 sent on 19 March XX “We refuse payment as the documents contain the discrepancy late shipment. We are holding documents at your risk and disposal. CORRECT ANSWER B. MT 799 sent on 18 March XX “We refuse your presentation as the documents contain the following discrepancies: Late shipment, Partial shipment. We are returning the documents to you by courier Chapter 6 51 By: Muhammad Iqbal Siddiqui

52. Which of the following parties is NOT AUTHORISED to sign a multimodal transport document? A. Carrier B. Master C. Multimodal Transport Operator D. Agent of the Master C. Multimodal Transport Operator Chapter 6 52 By: Muhammad Iqbal Siddiqui

53. What purpose does an inspection certificate serve? A. Ensures goods are of a certain quality and insured? B. Ensures there is no over invoicing and goods are adequately insured C. Ensures quality of goods is as per globally acceptable standards D. Ensures that the goods are of certain quality as requested by the applicant Chapter 8 53 By: Muhammad Iqbal Siddiqui

54. The consignor / exporter on the certificate of origin: A. Must be consistent with shipper on the transport document B. Must be the same as the beneficiary of the credit C. May be any party D. Must either be the shipper on the transport document or the beneficiary C. May be any party Chapter 8 54 By: Muhammad Iqbal Siddiqui

55. If a LC requires a presentation of export license, which of the following statements are TRUE? A. It may be issued by the export licensing authority in the country of export B. It may be issued by the beneficiary and stamped by export licensing authority C. It should include certification by export licensing authority allowing the export of goods D. All of the above Chapter 8 55 By: Muhammad Iqbal Siddiqui

56. Which of the following statements BEST describes the purpose of a packing list? I. To indicate to the applicant and carrier the gross and net weight of the goods II. To indicate to the clearing agent the description of goods in each package III. To enable customs authorities to conduct spot checks on the content of packages IV. To satisfy health authorities in the country of import Options: A. I and II B. II and III C. I and IV D. I and III B. II and III Chapter 8 56 By: Muhammad Iqbal Siddiqui

57. Extract from a credit: LC Value: USD 10,000 / Quantity: 100 Kgs / Partial Shipments: Not Allowed Which of the following presentations are ACCEPTABLE? A. Invoice showing shipment of 100 Kgs for USD 9,000 B. Invoice showing shipment of 100 Kgs for USD 9,800 C. Invoice showing shipment of 90 Kgs for USD 9,500 D. Invoice showing shipment of 105 Kgs for USD 10,500 B. Invoice showing shipment of 100 Kgs for USD 9,800 Chapter 9 57 By: Muhammad Iqbal Siddiqui

58. As a nominated bank, which of these should be followed while handling pending dishonored documents? I. The documents should be held at the disposal of the applicant II. The documents should be securely stored III. The presenter needs to be informed at regular intervals IV. The presenter need not be informed at regular intervals Options: A. I and II B. I and III C. II and III D. II and IV C. II and III Chapter 9 58 By: Muhammad Iqbal Siddiqui

59. Which of the following shipments are acceptable under a credit which prohibits partial shipment and requires shipment of 1000 boxes of shoes for about USD 10,000? I. Shipment consisting of 1000 boxes of shoes for USD 9500 II. Shipment consisting of 950 boxes of shoes for USD 10,000 III. Shipment consisting of 1000 boxes of shoes for USD 11,000 IV. Shipment consisting of 1050 boxes for USD 10,500 Options: A. I only B. II and III C. I and III D. II and IV C. I and III Chapter 9 59 By: Muhammad Iqbal Siddiqui

60. Which of the following statements is FALSE with regard to URR 725? A. Unless otherwise it has issued a reimbursement undertaking, a reimbursing bank is not obliged to honour a reimbursement claim B. When a bank is not prepared to act in accordance with the reimbursement authorization, it should advise the issuing bank without delay C. When a bank is not prepared to act in accordance with the reimbursement authorization, it should inform the advising bank of the credit without delay D. Issuing banks should not require a sight drafts to be drawn on the reimbursing bank Correct Answer is Option “C” C. When a bank is not prepared to act in accordance with the reimbursement authorization, it should inform the advising bank of the credit without delay Chapter 10 60 By: Muhammad Iqbal Siddiqui

61. If a credit requires that “All shipping documents should state the HS Code No, which of the following is TRUE? A. The transport documents should evidence HS Code No B. All documents except drafts should evidence the HS Code No C. All documents including the drafts should evidence HS Code No D. Only the invoice should evidence HS Code No B. All documents except drafts should evidence the HS Code No Chapter 11 61 By: Muhammad Iqbal Siddiqui

62. In which of the following trades is a letter of indemnity commonly seen ? A. Normal commercial transactions B. Trade manufactured goods C. Commodity Trade D. Sale of capital machinery C. Commodity Trade Chapter 11 62 By: Muhammad Iqbal Siddiqui

63. Extract from a LC: Shipment : From any Pakistani Airport to Chinese Airport Documents: Full set of airway bills consigned to order of ABC Ltd evidencing the flight number Transshipments: Not allowed Which of the following documents are ACCEPTABLE under this LC? I. Full set airway bill showing shipment from Karachi to Chinese airport, consigned to ABC Ltd on Flight No. 172 II. House airway bill showing shipment from Karachi to Shanghai, consigned to ABC Ltd on Flight No. 172 III. Airway bill showing shipment from Karachi to Shanghai, consigned to order of ABC Ltd stating Flight No. 172 in “Requested Flight” box IV. Airway bill marked “Original for shipper” showing shipment from Karachi to Beijing, consigned to ABC Ltd on Flight No. 171 from MAA to SIN and Flight No. 173 from SIN to KHI (i.e. using IATA codes) Options: A. I and II B. II and III C. IV only D. I and IV C. IV only Chapter 12 63 By: Muhammad Iqbal Siddiqui

64. Your client presents documents under a LC which states that shipment is to be effected in the beginning of February. Which of the following documents will be ACCEPTABLE? A. Marine B/L showing date of receipt of goods as 07 February XX B. A railway bill bearing a reception stamp dated 08 February XX C. An airway bill evidencing flight date as 15 February XX D. All of the above B. A railway bill bearing a reception stamp dated 08 February XX Chapter 12 64 By: Muhammad Iqbal Siddiqui