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Specimen paper
2 Hours
INSTRUCTIONS TO CANDIDATES
1
This question paper consists of 100 stand alone multiple choice questions.
OTHER INFORMATION
1.
A qualification assessed and awarded by the ifs School of Finance, a registered charity incorporated by Royal Charter.
2.
3.
agent.
exporter.
importer.
insurer.
7.
air only.
rail and air.
rail and road.
road and air.
When agreeing to payment in advance terms, who will carry the greatest level of risk in the
transaction? The:
A
B
C
D
6.
5.
2000.
2003.
2005.
2007.
Which of the following most accurately describes the purpose of Incoterms? They:
A
B
C
D
4.
a formal document.
a witness.
an affidavit.
consideration.
certificates.
consents.
documents.
policies.
documentary collection.
documentary credit.
open account.
payment in advance.
Page 2 of 18
9.
Which of the following governs the issuance of demand bonds and guarantees?
A
B
C
D
10.
14.
Which of the following activities, if seen on a business account, might put bank staff upon
enquiry?
A
B
C
D
13.
12.
Incoterms 2000.
UCP 600.
URC 522.
URDG 458.
For a limited company to have capacity to contract, the nature of the business must be:
A
B
C
D
11.
eUCP.
Incoterms 2000.
UCP 600 or ISP 98.
URC 522 only.
Page 3 of 18
Which of the following documents assures the importer that goods are of a certain standard?
A
B
C
D
16.
Which type of invoice is requested when a country wishes to prevent the dumping of goods at
artificially low prices?
A
B
C
D
17.
21.
ICC 2000.
UCP 600.
URC 522.
URDG.
20.
exporter.
importer.
insurance company.
shipping company.
19.
Commercial invoice.
Consular invoice.
Legalised invoice.
Pro-forma invoice.
18.
An ECGD policy.
An inspection certificate.
An insurance certificate.
An insurance policy.
Apple Limited contracts with Banana Limited to build a bridge for Banana Limited. Banana
Limited requires a guarantee from Orange Bank. Under URDG 458, who is the principal?
A
B
C
D
A third party.
Apple Limited.
Banana Limited.
Orange Bank.
Page 4 of 18
Which of the following terms would you not expect to see in a contract?
A
B
C
D
23.
Which of the following is incorrect? Under the PCA it is a criminal offence to be involved in:
A
B
C
D
24.
Bill of exchange.
Certificate of origin.
Commercial invoice.
Consular invoice.
Under a 90-day bill of exchange, the drawee will have an obligation to:
A
B
C
D
28.
27.
at any port.
at the importers premises.
for collection at their premises.
to a carrier.
26.
concealing, disguising, converting, transferring or removing criminal property from the UK.
the acquisition and/or possession of criminal property.
tipping off a person that a disclosure has been made.
using a forged passport to open a bank account.
A sales contract specifies 'Ex Works'. This means that the exporter must make the goods
available:
A
B
C
D
25.
Prices.
The governing law.
The names of the parties to a contract.
The qualifications of the contracting parties.
accept the bill and arrange to have sufficient funds available to make payment 90 days
later.
discount the bill.
discount the bill and arrange to have sufficient funds available to make payment 90 days
later.
negotiate the bill.
Which of the following is not one of the three recognised phases of money laundering?
A
B
C
D
Evasion.
Integration.
Layering.
Placement.
Page 5 of 18
30.
Which of the following has established universally accepted rules for the treatment of
collections?
A
B
C
D
31.
A factoring facility.
A letter of credit.
A standby guarantee.
An invoice discounting facility.
35.
Which of the following would not be used in conjunction with open account trade?
A
B
C
D
34.
bank.
drawee.
freight forwarder.
payee.
Sanjay Importing Limited agree to buy a shipment of materials from Hong Kong Trading
Corporation. It agrees payment in advance terms. When should Sanjay Importing Limited make
the payment?
A
B
C
D
33.
32.
a third party.
the beneficiary.
the beneficiary's bank.
the principal.
Page 6 of 18
A bank collects a cheque or bill of exchange on behalf of someone who is not the true owner of
it. The bank is guilty of:
A
B
C
D
37.
The contract terms are 'FCA Southampton Container Depot'. Which of the following transport
documents would be acceptable to the importer?
A
B
C
D
38.
42.
Bill of exchange.
Cheque.
Credit note.
Promissory note.
Which of the following would provide finance for the exporter with recourse?
A
B
C
D
41.
Which of the following is not a financial document commonly presented under a documentary
collection?
A
B
C
D
40.
Which of the following terms on a bill of exchange giving 90 days' credit will be acceptable? Pay
this bill of exchange:
A
B
C
D
39.
conversion.
deception.
fraud.
theft.
What course of action would the issuer take in the event of a claim being made against the
guarantee?
A
B
C
D
They must first check the underlying contract to ensure there has been an actual
omission.
They must honour the payment.
They should appoint an agent to check validity of the claim.
They should first seek approval from the principal to make payment.
Page 7 of 18
44.
Failure to comply with all terms of a contract constitutes a breach of contract unless:
A
B
C
D
45.
In which of the following areas would importers or exporters need to produce a SAD document?
A
B
C
D
49.
48.
47.
If you are suspicious about a transaction which a client has asked you to carry out, what must
you do?
A
B
C
D
46.
Delay in presenting a bill of exchange for payment removes liability from the acceptor.
Once acceptance has been given the importer has no liability for payment.
Signature by the acceptor does not indicate legal capacity to do so.
The drawee has no liability on a bill until it is accepted.
Australia.
Canada.
Germany.
Mexico.
Which of the following describes the collection of a bill of exchange without any other
commercial or transport documents?
A
B
C
D
Clean collection.
Documentary collection.
Exchange collection.
Promissory collection.
Page 8 of 18
51.
For a bank to advance money to an importer against the security of goods, which of the
following conditions are essential? The importer has:
A
B
C
D
52.
Section 2.
Section 4.
Section 24.
Section 32.
Under 'FAS Port of London' terms, which of the following most accurately describes the
responsibilities of the exporter? Package goods in a suitable manner:
A
B
C
D
56.
55.
54.
Which of the following may be required once a performance bond has expired?
A
B
C
D
53.
acceptance.
payment.
honour.
negotiation.
bank credit.
documentary credit.
payment credit.
uniform credit.
Page 9 of 18
58.
Which of the following describes the difference between a 'collection' and a 'letter of credit'?
With a letter of credit:
A
B
C
D
59.
A bank.
A shipping company.
A warehousing agent.
An insurance company.
'Layering' is:
A
B
C
D
63.
62.
A bill of lading.
A notary's confirmation of the dishonour of a bill.
A packing list.
Certificate of origin.
To forestall money laundering, banks must take appropriate measures to ensure that all staff
are:
A
B
C
D
61.
60.
When negotiating a contract, which words should be added to correspondence to show that it is
part of the negotiation process rather than a formal offer?
A
B
C
D
Caveat emptor.
Pro forma.
Sub judice.
Subject to contract.
Page 10 of 18
65.
66.
acceptance facility.
counter indemnity facility.
counter trade facility.
forfaiting facility.
Assignment of a guarantee:
A
B
C
D
70.
A facility granted to importers which guarantees an accepted bill of exchange is also known as:
A
B
C
D
69.
68.
agent.
applicant.
intermediary.
seller.
Which of the following statements is true in connection with the presentation of documents
associated with a letter of credit? They:
A
B
C
D
67.
Page 11 of 18
If you run a London-based exporting company, what would you wish to nominate as the law
governing the contract?
A
B
C
D
72.
Under the Incoterm 'CFR Durban', which of the following obligations are the responsibility of the
exporter? Package goods in a suitable manner:
A
B
C
D
73.
bills of exchange.
letters of credit.
promissory notes.
trust receipts.
77.
Very large companies can sometimes raise finance by the issue of commercial paper direct to
investors. These are also known as:
A
B
C
D
76.
ICC 2000.
UCP 600.
URC 522.
URDG Article 3.
Why might an exporting company insist on payment in advance terms? When it has:
A
B
C
D
75.
supply a commercial invoice to the buyer and pay for the transport of goods to Durban.
and pay for export licence, duties, taxes, supply a commercial invoice to the buyer.
and pay for export licence, duties, taxes, supply a commercial invoice to the buyer, pay
for the transport of goods to Durban, pay for the unloading costs and supply the transport
document.
and pay for export licence, duties, taxes, supply a commercial invoice to the buyer and
documentary evidence of sellers contingency insurance.
74.
British law.
English law.
The law of diminishing returns.
The law of the buyer's country.
as a means of payment.
as a warranty for goods or service.
to give title to goods.
to protect against non payment.
The beneficiary.
The exporter.
The guarantor.
The importer.
Page 12 of 18
79.
A clean bill of lading marked 'shipped on board' and 'freight paid to Hong Kong' would be
acceptable under which of the following shipping terms?
A
B
C
D
80.
40-50%.
60-70%.
80-90%.
100%.
84.
exporter.
exporter's bank.
importer.
importer's bank.
An invoice finance facility will typically provide what percentage advancement for an invoice?
A
B
C
D
83.
82.
CFR(Hong Kong).
CIF(Hong Kong).
EXW(Hong Kong).
FOB(Hong Kong).
81.
NATO.
UNCITRAL.
UNICEF.
WHO.
applicant.
beneficiary.
drawer.
exporter.
In a letter of credit, which of the following describes the bank in the exporter's country through
which the credit is transmitted? The:
A
B
C
D
advising bank.
issuing bank.
nominated bank.
remitting bank.
Page 13 of 18
Once final agreement is reached on a contract, and it is signed by all parties, any amendments
will require:
A
B
C
D
86.
In documentary collections, the specified collecting and presenting banks are normally:
A
B
C
D
87.
applicant.
exporter.
importer.
issuer.
91.
ACAS.
American Arbitration International Centre for Dispute Resolution.
ICCCA.
London Court of International Arbitration.
90.
Which of the following does not provide arbitration services for commercial disputes?
A
B
C
D
89.
in different countries.
the exporter's bank and the importer's bank respectively.
the importer's bank and the exporter's bank respectively.
the same bank.
If differences arise between parties to a contract and they cannot agree amongst themselves,
the next step should be to:
A
B
C
D
88.
less expensive.
more expensive.
safer for the exporter.
safer for the shipper.
If an importing company cannot immediately clear goods from the port, it will incur which of the
following charges from the Port Authority?
A
B
C
D
Demurrage charges.
Insurance premiums.
Parking fines.
Search fees.
Page 14 of 18
93.
94.
98.
97.
A cash deposit.
A chattels mortgage.
A debenture.
A loan postponement.
96.
As security for an invoice discounting facility for a limited company, a bank would normally look
to take which of the following as security?
A
B
C
D
95.
Page 15 of 18
certificate issued by the beneficiary stating that the applicant had not made payment on
the due date.
certificate issued by the beneficiary stating that the goods have been received in good
order.
certificate of origin.
full set of clean on board bills of lading.
100. Typically, an insurance company would offer to provide protection against unfair calling of a
bond against:
A
B
C
D
a failure by the beneficiary to make a claim within the validity of the guarantee.
a failure by the principal to honour payment at maturity for the underlying contract.
a failure by the principal to perform under the contract.
the exporter's failure to perform because of political events.
Page 16 of 18
Answer
Syllabus Ref
1
2
3
4
D
A
B
C
5
6
7
8
9
10
11
12
13
14
C
C
D
C
D
D
A
D
A
C
15
16
17
18
19
20
A
C
A
D
21
22
23
24
25
B
D
D
C
D
26
27
28
29
30
31
A
A
D
B
32
33
34
35
36
37
38
B
B
D
A
A
D
C
39
40
41
C
C
C
42
43
B
D
44
45
46
A
D
C
B
C
49
50
51
A
D
A
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
C
D
C
D
B
C
A
B
B
A
C
D
D
B
C
D
D
A
A
B
C
B
D
C
D
C
B
A
A
A
C
A
A
D
D
D
A
B
A
A
B
D
C
D
C
A
C
A
D
international trade
The principles of advanced payment and open account trading
The nature of financial, commercial and transport documents used in
international trade
Documentary collections in accordance with URC 522
Short-term trade finance
The nature of financial, commercial and transport documents used in
international trade
Bank guarantees
Procedures involved in Trade Contracts
International trade products
Trade terms and Incoterms 2000
The nature of documentary credits
International trade products
The nature of documentary credits
Bank guarantees
International trade products
The nature of documentary credits
International trade products
Procedures involved in Trade Contracts
Trade terms and Incoterms 2000
The nature of documentary credits
The nature of documentary credits
Documentary collections in accordance with URC 522
Short-term trade finance
Bank guarantees
International trade products
Procedures involved in Trade Contracts
Trade terms and Incoterms 2000
The nature of documentary credits
The principles of advanced payment and open account trading
Short-term trade finance
The non-payment risk covered by bank products
Bank guarantees
International trade products
Trade terms and Incoterms 2000
The nature of documentary credits
Documentary collections in accordance with URC 522
Short-term trade finance
The non-payment risk covered by bank products
The nature of documentary credits
Procedures involved in Trade Contracts
Documentary collections in accordance with URC 522
Procedures involved in Trade Contracts
International trade products
The nature of documentary credits
Documentary collections in accordance with URC 522
International trade products
The non-payment risk covered by bank products
Trade terms and Incoterms 2000
Short-term trade finance
The nature of documentary credits
Bank guarantees
Documentary collections in accordance with URC 522
Short-term trade finance
The non-payment risk covered by bank products
Bank guarantees
Page 18 of 18