A ______________ is useful when regular and repetitive transactions are amendable to the L/C, one in which the amount of the Credit can be renewed or reinstated according to the terms and conditions of the original Credit, without the need for a specific amendment.*

Freely negotiable L/C

Transferable L/C

Standby L/C

Revolving L/C

Back to back L/C

All of the followings are unique aspects of a transferable L/C theme for exporters and suppliers Except:*

The first beneficiary may elect that all amendments not be advised to the second beneficiary.

The L/C is transferable only if it says it is.

There can be multiple second beneficiaries if the L/C does not allow partial shipments

The L/C can be transferred only once.

Which of the following methods of payment has the least risk to the exporter?*

Sight draft collection

Open account

Time draft collection

Sight letter of credit

The Letter of Credit Application is filled out by the ____________.*

Issuing Bank

Importer/ Applicant

Advising Bank

Exporter/ Beneficiary

Central Bank

To reduce the country risk, the best type of L/C is ______________________.*

Confirmed revocable L/C

Confirmed irrevocable L/C

Freely negotiable L/C

Back to back L/C

Irrevocable L/C

According to the URC522, the collection letter (documentary bill) is prepaid and signed by __________________.*

the drawee

the payee

the remitting bank

the drawer

If a bill of lading is Consigned to Order the shipper, this means:*

the carrier receives the original Bill(s) of Lading, signed as loaded on board. Title to goods resides with the shipper. The shipper endorses them in blank to pass along negotiability.

the carrier receives the original Bill(s) of Lading, signed as loaded on board. Title to goods resides with the carrier. The carrier endorses them in blank to pass along negotiability

the exporter receives the original Bill(s) of Lading, signed as loaded on board. Title to goods resides with the shipper. The shipper endorses them in blank to pass along negotiability.

None of the above

According to URC522, Collection means the handling of documents by banks in accordance with instructions received, in order to:*

Obtain payment and/or acceptance

Deliver documents against payment and/or against acceptance

Deliver documents on other terms and conditions

All of the above

If there is any discrepancy on the issued L/C, the beneficiary will send the amendment request to the ____________.*

Advising bank

Importer/ Applicant

Importer/ Applicant through the advising bank

Issuing Bank

Counter Standby L/C supports:*

the issuance of a separate standby or other undertaking by the beneficiary of the counter standby.

an obligation to account for an advance payment made by the beneficiary to the applicant.

supports an obligation to pay money, including any instrument evidencing an obligation to repay borrowed money.

the payment when due of an underlying payment obligation typically connected with a financial standby without regard to default.

the obligations of an applicant to pay for goods or services in the event of non-payment by other methods.

On the Usance letter of credit, goods are available to the buyer, _______________.*

Upon arrival

Upon the drawee's acceptance of the time draft under the documentary collection.

Upon settlement of the L/C obligation by the buyer to the issuing bank

Upon the drawee bank's acceptance of the time draft drawn under the L/C

Commercial Standby L/C supports:*

the issuance of a separate standby or other undertaking by the beneficiary of the counter standby.

the payment when due of an underlying payment obligation typically connected with a financial standby without regard to default.

an obligation to account for an advance payment made by the beneficiary to the applicant.

the obligations of an applicant to pay for goods or services in the event of non-payment by other methods.

Which of the following variance L/Cs can be transferred to the third beneficiary(ies)?*

Red Clause L/C

Back to Back L/C

Transferable L/C

Ever Green L/C

None of the above

A revocable green clause L/C allows the beneficiary to take the goods to a neutral warehouse when the shipment is ready before time. The warehouse will give a

negotiable warehouse receipt to the beneficiary. Based on the negotiable warehouse receipt, the advising bank has the authority to pay under L/C to the beneficiary.*

True

False

Which method of payment can highly protect the exporter against the country risks?*

Irrevocable confirmed documentary collection

Revocable documentary collection

Open account

Irrevocable unconfirmed letter of credit

None of the above

A Red Clause L/C is*

1.An irrevocable L/C with special instructions wrote in red to the confirming bank from issuing bank for the beneficiary to extend some funds to the beneficiary prior to export. The risk is on the confirming bank, and the advising bank has the authority to pay under L/C to the beneficiary.

2.An irrevocable L/C with special instructions wrote in red to the issuing bank from the advising bank for the applicant to extend some funds to the applicant to open the L/C. The risk is on the advising bank, and the issuing bank has the authority to pay under L/C to the applicant.

3.An irrevocable L/C with special instructions wrote in red to the advising bank from issuing bank for the beneficiary to extend some funds to the beneficiary prior to export. The risk is on the issuing bank, and the advising bank has the authority to pay under L/C to the beneficiary.

4.An irrevocable L/C with special instructions wrote in red to the issuing bank from advising bank for the beneficiary to extend some funds to the beneficiary prior to export. The risk is on the issuing bank, and the advising bank has the authority to pay under L/C to the beneficiary.

The Credit instruction is issued by the ____________.*

Central Bank

Exporter/ Beneficiary

Issuing Bank

Advising Bank

Importer/ Applicant

The nominated bank is a bank*

1.is the bank that purchases drafts and/or documents under a complying presentation.

selected by the issuing bank to which the beneficiary is directed to present documents for payment, acceptance, or a deferred payment undertaking.

2.holds the local currency account of the issuing bank.

in the exporter's country that receives the letter of credit from the issuing bank, determines it is authentic, and informs the seller that the letter of credit is available.

In an irrevocable confirmed L/C transaction, the obligation of the confirming bank does not eliminate the obligation of the presenting bank.

True

False

Under which circumstances the back to back L/C is essential?*

If the ultimate seller requires cash or a negotiable L/C.

If the importer is willing to open a transferable L/C.

If the ultimate seller is willing to disclose its supplier.

None of the above

The Documentary Credit is a perfect instrument when ________________________.

the buyer wants to receive documents that evidence shipment and transfer title

the seller wants assurance of payment in exchange for shipping and title documents.

the beneficiary requires third party assurance of payment at a predetermined point in time.

Both a and b

If there is a conflict between ISP98 and URC 522, URC522 prevails.*

True

False

Which of the following methods of payment has the least risk to the importer?*

Sight draft collection

Sight letter of credit

Open account

Time draft collection

In a sight letter of credit transaction, the risk to the seller is ________________.*

The rejection of documents by the remitting bank.

Minimal, if all terms and conditions of the credit collection are met.

The possibility of non-payment of draft when goods are in transit.

Minimal, if all terms and conditions of the documentary collection are met.

All of the followings are common L/C discrepancies Except:*

The shipment was made after the latest shipping date specified.

The merchandise description on the invoice is not identical to that shown in the L/C.

The insurance documents are not endorsed, or endorsed incorrectly.

The required number of original transport documents are not presented.

None of the above

Please, use the following information to answer the following questions:

A Canadian exporter has received three Usance L/Cs for exported crude canola oil with the following values and maturity dates:

USD1,000,000 - September 30th, 2020

USD1,500,000 - October 31st, 2020

USD500,000 - November 29th, 2020

On April 11th, 2020, BMO has accepted to discount of all of the above L/Cs with the annual discount rate of:

9% with recourse

15% without recourse

Exclude the First and the Last day.

How much is the total of interest charges if the company decides to discount all the L/Cs with recourse?*

$148,107

$248,625

$147,375

$393,000

$148,839

How much is the total amount payable to the exporter after discounting without recourse?*

$2,751,375

$2,754,375

$2,851,161

$2,851,893

$2,607,000

How much is the total of interest charges if the company decides to discount all the L/Cs without recourse?*

$393,000

$249,037

$248,065

$246,845

$245,625

How much is the total amount payable to the exporter after discounting with recourse?*

$2,852,625

$2,750,963

$2,607,000

$2,751,935

$2,753,155