CDCS specimen paper

C An unconfirmed documentary credit payable at sight with drafts on issuing bank calling for a third-party quality certificate.. D A confirmed documentary credit available by acceptance

Certificate for Documentary Credit Specialists (CDCS®)

SPECIMEN PAPER

Section A

1 A documentary credit for USD 120,000 calls for shipment of fertiliser in February, March, April and May Each shipment is to be for about 500 tonnes Shipments were effected as follows:

1 450 tonnes on 24 February for value USD 27,000

2 550 tonnes on 12 April for value USD 33,000

3 460 tonnes on 30 April for value USD 28,000

4 550 tonnes on 04 June for value USD 33,000

Which of the above shipments will be honoured on presentation?

A 1 only

B 1 and 3 only

C 2 and 4 only

D 1, 2 and 3 only

2 In accordance with ISP 98, which of the following statements is correct? The issuer of a

standby letter of credit MUST:

A validate the breach of any underlying transaction

B ensure the accuracy of any documents presented

C ensure that any documents presented are genuine

D honour presentations that appear on their face to comply

3 If an exporter is willing to release the shipping documents directly to the buyer, but requires a guarantee of payment should the buyer default, which of the following BEST suits the exporter’s needs?

A Standby

B Revolving

C Evergreen

D Transferable

4 A reimbursing bank has received a valid claim under its reimbursement undertaking and is

simultaneously instructed by the issuing bank NOT to honour the claim In accordance with the

URR 725, the reimbursing bank should:

A request the claiming bank to cancel the claim

B instruct the claiming bank to contact the beneficiary

C honour the claim and debit the issuing bank's account

D dishonour the claim as per the issuing bank's instruction

5 An importer requires goods of a stipulated quality while the exporter requires certainty of

payment Which of the following would BEST meet all requirements?

A A confirmed standby credit payable on demand calling for beneficiary's quality certificate

B A confirmed documentary credit payable at sight calling for beneficiary's quality certificate

C An unconfirmed documentary credit payable at sight with drafts on issuing bank calling for

a third-party quality certificate

D A confirmed documentary credit available by acceptance with drafts drawn on confirming bank calling for a third-party quality certificate

6 When an advising bank has accepted a usance draft, it is responsible for effecting payment at maturity when:

A the draft is verified by the applicant

B the draft is presented by the beneficiary

C it has received funds from the issuing bank

D it has received funds from the reimbursing bank

7 A sight documentary credit authorises a nominated bank to pay the beneficiary Upon receipt of complying documents, direct from the beneficiary, the issuing bank should:

A pay the beneficiary

B pay the nominated bank

C remit the documents to the nominated bank for examination

D return the documents to the beneficiary for presentation to the nominated bank

8 If a credit, available with the issuing bank, calls for a draft at 60 days after sight, it is available by:

10 In accordance with UCP 600, which of the following banks MAY have an undertaking to

negotiate complying documents?

A Negotiation with a nominated bank in country X

B Acceptance by the nominated bank in country X

C Sight payment with the issuing bank in country Y

D Sight payment with the nominated bank in country X

12 Which of the following payment terms are possible under a credit available with, and requiring a draft drawn on, an issuing bank?

of an assignee are subject to:

A the rights of any other acknowledged assignees

B the rights of any other assignees, pending acknowledgement

C any other rights or interests that may have priority under the applicable law

D the existence of any net proceeds payable to the beneficiary by the person making the acknowledgement

15 In a letter of credit available by acceptance, a confirming bank gives an undertaking to:

1 accept drafts not accepted by the stipulated drawee bank

2 accept drafts not accepted by the issuing bank

3 accept drafts drawn on itself

4 pay drafts accepted by the drawee bank and unpaid by the drawee bank at maturity

A 1 and 2 only

B 1 and 3 only

C 2 and 4 only

D 3 and 4 only

16 Under a standby letter of credit subject to a participation agreement, the issuer:

A may sell participations in their rights against the applicant and any presenter

B may not disclose relevant applicant information in confidence to potential participants

C will affect its obligation under the standby letter of credit by any participations sold

D will create new rights and obligations between the beneficiary and the participants

17 In accordance with UCP 600, which of the following terms may NOT be altered on a transferred documentary credit?

A Credit amount

B Required documents

C Period for presentation

D Amount of insurance cover

18 Which of the following examples under UCP 600 is discouraged?

A The goods description field states "goods per the copy of the proforma invoice appended

to the credit which forms an integral part of the credit"

B A copy of the sales contract is submitted with the credit application to the issuing bank and there is no reference to such attachment within the credit application

C The additional conditions field states that this credit is relative to sales contract XYZ and that all documents must state "details per purchase order 123 and contract XYZ"

D A copy of the purchase order is provided to the issuing bank for information purposes only and the goods description field of the credit application includes details of the purchase order

19 A standby letter of credit which supports the obligations of an applicant to pay for goods or services in the event of non-payment by other method is usually described as:

A USD 0

B USD 25,000

C USD 75,000

D USD 100,000

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

1,000 units shipped between 01 June and 30 June

2,000 units shipped between 01 July and 31 July

2,000 units shipped between 01 August and 31 August

3,000 units shipped between 01 September and 30 September

The beneficiary shipped the goods and presented documents as follows:

1 1,000 units shipped on 15 June, documents presented on 30 June

2 3,000 units shipped on 15 July, documents presented on 28 July

3 2,000 units shipped on 31 July, documents presented on 15 August

4 3,000 units shipped on 15 September, documents presented on 30 September

Which of the above sets of documents are complying?

A USD 22,500

B USD 112,500

C USD 157,500

D USD 180,000

23 An advising bank receives the beneficiary's request to partially transfer an irrevocable

transferable documentary credit, which is freely available and does not nominate a transferring bank In accordance with UCP 600, the advising bank:

A may transfer the documentary credit as requested

B may transfer the documentary credit only in its entirety

C should request the issuing bank to authorise a partial transfer

D should obtain the issuing bank's authorisation as the nominated transferring bank

24 A documentary credit calls for a draft at 95 days bill of lading date drawn on the confirming bank The documentary credit is available by:

Partial shipment allowed

Latest shipment date 30 April

Expiry date 15 May

On 02 March the applicant requests an amendment prohibiting partial shipment and extending the expiry date to 30 May In accordance with UCP 600, what action MUST the issuing bank take?

A Clarify with the applicant the period for presentation

B Issue the documentary credit incorporating all the amendments

C Issue the documentary credit incorporating only the extended expiry date

D Issue the documentary credit as originally instructed, without amendments

26 On 03 January, an irrevocable documentary credit for USD 500,000 is confirmed On 17

January the confirming bank receives an amendment cancelling the documentary credit What is the liability of each bank?

A Issuing and confirming bank - USD 0

B Issuing and confirming bank - USD 500,000

C Issuing bank - USD 0; confirming bank - USD 500,000

D Issuing bank - USD 500,000; confirming bank - USD 0

27 The confirming bank receives documents on Friday 02 April and finds them complying on 05 April Tenor is 30 days after the bill of lading date The bill of lading is dated 01 April, and the confirming bank agrees to pay the beneficiary immediately On what date would the confirming bank expect to receive funds from the issuing bank? (There are NO bank holidays and

Saturdays and Sundays are NOT banking days.)

A Disregard the term

B Seek clarification from the issuing bank

C Refuse to advise the documentary credit

D Advise the documentary credit as transferable

29 A documentary credit is issued with drafts at 45 days sight drawn on the confirming bank Under special conditions it states 'drafts can be discounted and paid on a sight basis' The applicant’s account will be debited at:

A maturity by the issuing bank

B maturity by the confirming bank

C the time of acceptance by the issuing bank

D the time of acceptance by the confirming bank

30 Documents presented to the issuing bank have been found discrepant The bank has left a message for the applicant to discuss the discrepancies The bank should:

A return the documents to the presenter

B continue to hold the documents until discussion with the applicant No further action is required

C send notice of refusal to the presenter without listing discrepancies as the applicant has not been consulted

D send notice of refusal by the close of the fifth banking day following presentation, listing all discrepancies and current disposition of the documents

31 A documentary credit calls for the beneficiary's invoice in 3 copies Which of the following requirements is mandatory for a complying presentation?

A All must be signed

B All must be original

C At least one of the three must be signed

D At least one of the three must be original

32 Documents, including the CMR consigned to the order of the issuing bank, have been delayed

in transit between the confirming bank and the issuing bank The applicant requires the goods urgently and therefore requests from the issuing bank a:

A delivery order

B letter of indemnity

C performance guarantee

D shipping company guarantee

33 A third-party supplier requires a notice of assignment from the nominated bank prior to shipping the goods This notice of assignment:

A is an irrevocable undertaking to pay the third-party supplier

B authorises the third-party supplier to perform the role of the beneficiary

C guarantees payment upon presentation of documents by the third-party supplier

D is a conditional undertaking from the nominated bank to pay the third-party supplier from proceeds, if any, payable under the credit

34 A documentary credit requires presentation of a full set of bills of lading or a letter of indemnity in lieu of the bills of lading These documentary requirements are typically associated with the shipment of:

A indemnifies the bank against all actions, damages and costs

B undertakes to accept the underlying documents irrespective of discrepancies

C gives the issuing bank authority to debit its account for the full value pending inspection of the goods

D undertakes that should the goods form part of a large consignment it will accept that consignment and pay the full value

36 Which of the following statements is correct under a common syndicate agreement?

A Amendments to the documentary credit will only bind the lead bank

B The documentary credit must stipulate the risk participation of each syndicate bank

C The value of the documentary credit, the goods, the validity for shipment and expiry should be covered

D Each participating bank draws up a syndicate agreement and each of these agreements

is countersigned by the lead bank

37 Which of the following Incoterms is correctly described?

Incoterm Insurance Doc Transport Doc

A DDP Required Marked freight paid

B CFR Required Marked freight collect

C FOB Not required Marked freight paid

D FCA Not required Marked freight collect

38 Under Incoterms 2010, which of the following terms are applicable for any mode or modes of transport?

40 A beneficiary requests the confirming bank to purchase complying documents presented under

a deferred payment credit In accordance with UCP 600, which of the following actions could the confirming bank take?

1 Obtain the issuing bank's agreement prior to paying the beneficiary

2 Refuse the beneficiary's request while undertaking to pay at maturity

3 Prepay the deferred payment undertaking

4 Obtain a recourse agreement from the beneficiary

43 A standby credit issued subject to ISP 98 requires presentation of a court order in duplicate originals Which of the following presentations would satisfy that requirement?

A Two copies

B Two originals

C One original and one copy

D One original and two copies

44 Which of the following banks MUST examine a presentation to determine whether it is complying or not?

A The advising bank

B The confirming bank

C The nominated bank

D The reimbursing bank

45 When an advising bank adds its confirmation to a documentary credit, which of the following risks has the beneficiary mitigated?

46 Prior to advising a documentary credit to the beneficiary, the advising bank is responsible for:

A effecting payment against conforming documents

B checking that the reimbursement method is effective

C checking the apparent authenticity of the documentary credit

D notifying the issuing bank that the documentary credit is being advised

47 When a bank confirms an irrevocable transferable documentary credit it assumes the credit risk

of which party?

A The applicant

B The issuing bank

C The first beneficiary

D The second beneficiary

48 An irrevocable confirmed documentary credit CANNOT be amended or cancelled without the

agreement of the:

A beneficiary and applicant

B confirming bank and issuing bank

C applicant, confirming bank and issuing bank

D beneficiary, confirming bank and issuing bank

49 In accordance with UCP 600, which of the following terms can a first beneficiary change in its transfer request?

A Decrease the unit price

B Decrease insurance cover

C Extend the expiry date

D Extend the latest shipment date

50 A bank issues a clean credit for GBP 50,000 Which of the following presentations would be acceptable under this credit?

A A credit note for GBP 50,000

B A simple receipt for GBP 48,000

C A draft for GBP 48,000 drawn on the issuing bank

D An invoice for GBP 50,000 addressed to the applicant

51 A transferable credit can do which of the following?

A Protect the applicant from the risks of loss and error

B Allow the second beneficiary to obtain payment for complying documents

C Restrict the right of the second beneficiary to claim payment directly from the transferring bank

D Permit the second beneficiary to provide the first beneficiary with the security of a

documentary credit

52 Which of the following statements is correct regarding transferable documentary credits?

A The first beneficiary may request that confirmation be withheld from the transferred credit

B The first beneficiary may cancel the transferred credit without the second beneficiary's consent

C A transferred credit can be transferred at the request of the second beneficiary to any subsequent beneficiary

D The transferred credit may expire in the second beneficiary's domicile on the expiry date

of the first beneficiary's credit

53 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

54 Which of the following statements is correct when an assignment of proceeds has been effected under a documentary credit issued in accordance with UCP 600?

The:

A assignee must present complying documents to receive payment

B assignee will receive payment of the proceeds directly from the applicant

C value of the documentary credit is reduced by the amount of the assignment

D beneficiary has assigned its rights to the stated amount of proceeds to the assignee

55 An issuer of a standby credit subject to ISP 98 is responsible for:

A accuracy of any document

B act of omission by the nominated bank

C observance of law as stated in the standby

D performance of any underlying transactions

56 Which of the following statements are correct? A documentary credit is issued in accordance with UCP 600 if available with:

1 any bank by deferred payment, no drafts required

2 the nominated bank by acceptance, term drafts drawn on the issuing bank

3 the issuing bank by negotiation, drafts drawn on the issuing bank

4 the issuing bank by acceptance, term drafts drawn on the issuing bank

1 shipment to the same port of discharge

2 same date of shipment

3 shipment on the same vessel

58 In accordance with UCP 600, an invoice may show:

1 deduction for a discount not stated in the credit

2 over-shipment of goods provided they are stated to be free of charge

3 shipment of goods not called for in the credit

4 shipment of goods not called for in the credit provided they are stated to be free of charge

1 if partial drawings are allowed

2 latest date for presentation of a claim, including any usance period

3 expiry date of the documentary credit

4 that the claiming bank must certify compliance with the credit terms

A 2 only

B 3 only

C 1, 2 and 3 only

D 2, 3 and 4 only

60 Notice of completeness under eUCP is sent by the:

A issuing bank to the confirming bank confirming receipt of electronic and paper documents

B presenting bank to the confirming or the issuing bank signifying that the presentation is completed

C beneficiary to the bank to which presentation is made signifying that the presentation is completed

D bank to which presentation is made to the beneficiary signifying that the bank has

received the complete presentation