Documentary letters of credit mcq s(1)
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The document discusses various aspects of documentary letters of credit including: 1. The beneficiary of a letter of credit is the seller. 2. The primary liability to honor bills drawn under a letter of credit, if documents are in order, is on the letter of credit opening bank. 3. The proceeds of payment made on bills drawn under a letter of credit are to be sent to the seller's bank for crediting the seller's account.
Documentary letters of credit mcq s(1)
- 1. DOCUMENTARY LETTERS OF CREDIT 1. Beneficiaryof an LC is (a) (a)Buyer (b) Seller (c) LC OpeningBank (d) LC NegotiatingBank 2. Primary liabilitytohonourbillsdrawnunder LC, ifdocuments are otherwise inorder, is on (a) LC OpeningBank (b) LC ConformingBank (c) LC ReimbursingBank (d) Buyeron whose behalf LChas beenopened. 3. Proceeds of payment madeon billsdrawnunder LC isto be sent to (a) The ConfirmingBank (b) The sellersbankforcreditingseller’saccount (c) NegotiatingBank (d) ReimbursingBank. 4. The mainrole ofLC advisingbankisto (a) Pay on behalf of LCissuingbank (b) Authenticate the LCissuingbank (c) Negotiate the billsdrawnunderLC (d) None of these 5. Whichofthe followingtypesofLC have ceased to exist under UCP600 (a) Red clause LC (b)Transferable LC (c) Revocable LC (d) Back to back LC. 6. A bank whichhas negotiatedbillsdrawnunder confirmedLC is required to submithis claimto (a) LC issuingbank (b) LC ConformingBank (c)either(a) or(b) (d) firstto issuingbankandif not paidthen to the confirming bank 7. An LC ConformingBankmay alsofunctionifit so desires, as (a)LCadvisingbank (b) LC negotiatingbank (c)both (a) or (b) (d) Neither(a) nor(b) 8. How many beneficiariescanbe of a transferableLC (a)One (b)Two (c) Three (d) Anynumberof beneficiariesispossible. 9. A foreignbuyer intends to financethe exporter forthe raw material required by him for the order. The buyer will request the banker to open (a) Back to back LC (b) Greenclause LC (c) Red clause LC (d) Transferable LC 10. Back to backLC is opened onbehalfof (a)Importer (b)Exporter (c)Exporter’ssupplier (d) None of these 11. Under UCP600 maximumtimeallowedto banks to honouror dishonourdocumentsis (a) 7 days (b)5days (c) 7 bankingdays (d)5 bankingdays 12. In dealingwith discrepantdocuments,which ofthe followingoptionsisnot available to banks underUCP-600? (a) Hold documents pending
- 2. furtherinstructionfrompresenter (b) Returnthe documents (c) Pay underreserve (d) Act as per instructionpreviouslyreceived. 13. The partiesconcerned with bankto bankreimbursementsare boundby (a) UCP (b) URR (c) ISP (d) Incoterms 14. In dealingwithLC and its documents,banksare responsiblefor (a) Genuinenessof the documents (b) For the acts of correspondentbanks (c) Errors intranslation/interpretationof technical terms (d) None of these. 15. LC documentsmust be consistentwith the requirements of (a) Incoterms (b) UCPDC (c) Exchange control guidelines (d) All of these 16. Bill of exchange,arising out of LC transactionis (a) Drawn by LC applicant onLC issuingbank (b) Drawn by LC applicantonbeneficiary’sbank (c) Drawn bybeneficiaryonLC issuingbank (d) Drawn by beneficiaryonhisbank 17. Whichofthe followingdocumentsmustbear LC numberwith the name ofissuing bank (a) Bill of exchange (b) Invoice (c) Bill of Lading (d) All of these. 18. Number ofnon-negotiablecopiesthatmust accompanya bill ofladingis (a) 3 (b)7 (c)5 (d) As mentionedinLC 19. Whichofthe following detailsmustbe mentionedininvoice accompanyingLC document (a) Termsof sale contract (b) Bill of ladingnumber (c) Name of LC issuingbankand LC number (d) All of these. 20. Currency of issuance of insurancepolicythat accompaniesdocumentsunderLC must be the (a) Currencyof the LC applicantscountry (b) Currencyof the beneficiary’s country(c)Currencyof the LC (d) any of the above 21. An importer fromIndiafailsto retire the billsreceived under LC, although,he holdsa forward contract for the amount.The LC issuingbankmustcrystallizethe liabilityin INR (a) Within10 days (b) Within15 daysif requestedbythe importers (c) Either(a) or (b) (d) Neither(a) or(b) 22. In the above example,the crystallizationwouldbedone at (a) Bill Sellingrate (b) Rate at whichforwardcontractwas booked (c) Either(a) or (b) (d) Neither(a) or(b) 23. Goodsimportedunder LC must be insuredat, if not specificallymentioned (a) 100% of invoice value (b) 110% of invoice value (c) 120% of invoice value (d) None of these
- 3. 24. Issuanceof commercial standby LCs attract provisionsof (a) ISP98 (b) UCPDC 600 (c)URR525 (d) All of these 25. A commercial standby LC may be used for the purpose of (a) Financial guarantee (b) Performance guarantee (c) Importof goods (d) All of these 26. An LC providesfor reimbursement to negotiatingbankthrougha reimbursingbank and sendsinstructionsto the reimbursingbank.The reimbursingbankmay honour reimbursement claim (a) If itis otherwise inorder (b) Providedithasreceivedthe instructionbyan authenticatedmeans (c) Provided ithasacceptedthe reimbursement authorizationfromissuing bank (d) Providedithasreceivedthe instructionbyanauthenticatedmeansalongwithacopy of the documentarycredit. 27. Reimbursement authority issuedby LC issuing bank hasa validity period (a) In accordance withthe LC (b) Of 7 bankingdaysfromthe date of negotiation (c) Of 5 bankingdaysfromthe date of negotiation (d) The reimbursement authoritymustnot have an expirydate 28. Whichofthe following sentencesis notcorrect? (a) Reimbursementauthoritymustbe issuedbyanauthenticatedmeans (b) Mail confirmationshouldbe sentforsuchtele transmission (c) The reimbursement authoritymustnot have an expirydate (d) Reimbursementauthorizationmuststate that theyare subjecttoURR-525. 29. A reimbursingbankhas given reimbursement undertakingwhichhas been duly accepted by the reimbursingbank.Issuingbankcan (a) Cancel its reimbursementauthorizationbyissuinganotice (b) Amendits reimbursementauthorizationbyissuinganotice (c) Cancel its reimbursementauthorizationwithoutissuinganotice (d)Can’tcancel its reimbursementauthorizationbyissuinganotice 30. The reimbursingbankmust process reimbursementclaim within (a) 5 banking days (b) 7 banking days (c) 3 working days (d) Nextday 31. Reimbursement claimsshouldnotbe presented to reimbursingbankearlier than (a) 10 days priorto due date (b) 7 dayspriorto due date (c) 3 daysprior to due date (d) Date of negotiation. 32. Reimbursingbanksare liableforconsequencesarisingout of (a) Delay/lossof anymessage intransit (b) Lock out of theirpremises (c) Strike (d) None of these 33. INCOTERMS deal with (a) Relationshipbetween sellerandbuyer (b) Relationshipbetween partiestoLC (c) Relationshipbetweenissuingbankandreimbursingbank (d) All of these
- 4. 34. Documents accompanyingaclaimmustnot be (a) Dated priorto the date of LC (b) Datedafterthe date of LC (c) Dated afterthe bill of lading (d) Datedafterthe date of presentation. 35. An irrevocableLC canbe (a) Revoked (b) Cancelled (c) Amendedwiththe concurrence of reimbursingbank (d) Amendedwithoutthe concurrence of partiesconcerned. 36. A back to back LC is (a) LC openedformeetingexportobligation (b) LC openedformeetingimport obligation (c) LC openedagainstamasterLC where masterLC isan exportLC (d) LC openedagainstamaster LC where masterLC isan importLC 37. The “Incoterms” FCAimplies (a) Inclusive of main carriage (b) Inclusive of maincarriage andinsurance (c) Excludingmaincarriage (d) None of these 38. “Incoterm” CIPmeans (a) Inclusive of cost&freight (b) Inclusive of costinsurance &freight (c) Inclusive of carriage andinsurance (d) Inclusive of carriage 39. “Incoterm” DDP means (a) Deliveredex-ship (b) Deliveredex-works (c) Delivereddutyunpaid (d) Delivereddutypaid 40. Bill of entry evidences (a) Goods have beenimported (b) Customsdutyhave beenpaidongoods (c) Goods have arrivedwithoutincurringanydamage (d) All of these