Letter Of Credit Basic
(103).jpg "Letter Of Credit Basic - Quiz")
This test consist of 15 multi question basic.
Questions and Answers
- 1.
As a seller I will consider the lowest risk methods of payments?
- A.
Open Account
- B.
Documentary Collections
- C.
Letters of Credit
- D.
Cash in Advance
Correct Answer
D. Cash in AdvanceExplanation
As a seller, considering the lowest risk methods of payment is important for ensuring the security of the transaction. Cash in advance is the most secure option as it requires the buyer to make full payment before the goods are delivered or the services are rendered. This eliminates the risk of non-payment or any other potential financial issues that may arise. By choosing cash in advance, the seller can protect themselves from potential losses and ensure that they receive payment before fulfilling the order.Rate this question:
-
- 2.
UCP 600 comes into effect on 01 July?
- A.
2008
- B.
2009
- C.
2010
Correct Answer
B. 2009Explanation
UCP 600 is a set of rules that govern international trade and the use of letters of credit. It was first published by the International Chamber of Commerce (ICC) in 2007 and came into effect on July 1, 2007. Therefore, the given answer "2009" is incorrect as it does not align with the actual effective date of UCP 600.Rate this question:
-
- 3.
The ISBP publications amend UCP 600
- A.
Yes
- B.
NO
Correct Answer
B. NOExplanation
The ISBP publications do not amend UCP 600. ISBP (International Standard Banking Practice) provides guidelines for the interpretation and application of UCP 600, but it does not have the authority to amend UCP 600. UCP 600 is a set of rules that governs the use of letters of credit in international trade, while ISBP provides additional guidance on how to apply those rules. Therefore, the correct answer is NO.Rate this question:
-
- 4.
Complying presentation means a presentation that is:
- A.
Within LC validity only
- B.
Presenting of all shipping documents
- C.
In accordance with LC terms & conditions
Correct Answer
C. In accordance with LC terms & conditionsExplanation
A complying presentation refers to a presentation of documents that fully adhere to the terms and conditions specified in the Letter of Credit (LC). This means that all the shipping documents required by the LC are included and meet the specified criteria. The presentation must also be made within the validity period of the LC. In other words, a complying presentation is one that follows all the guidelines and requirements outlined in the LC.Rate this question:
-
- 5.
If the beneficiary is not happy with the terms & conditions of LC, he can ask applicant for:
- A.
Fresh letter of credit (replacement)
- B.
An amendment
- C.
Applicant confirmation
Correct Answer
B. An amendmentExplanation
If the beneficiary is not satisfied with the terms and conditions of the LC (Letter of Credit), he can request an amendment from the applicant. This means that the beneficiary can propose changes or modifications to the existing LC to better suit his requirements. By requesting an amendment, the beneficiary can negotiate new terms and conditions that are more favorable to him, ensuring his satisfaction with the LC.Rate this question:
-
- 6.
Issuing bank is bound by a Letter of Credit The
- A.
From the time of issue LC
- B.
From the time the LC is advising by the Advising bank
- C.
From the time LC is received by the beneficiary
Correct Answer
A. From the time of issue LCExplanation
The correct answer is "From the time of issue LC." This means that the issuing bank is bound by the terms and conditions of the Letter of Credit (LC) from the moment it is issued. The LC serves as a guarantee of payment to the beneficiary, and the issuing bank must honor its obligations as stated in the LC once it is issued.Rate this question:
-
- 7.
Banking day means a day on which a bank is …………….at the place at which an act subject to these rules is to be performed.
- A.
Regularly open for an act
- B.
Start from Monday to Friday
- C.
Normal days including Eid holiday
Correct Answer
A. Regularly open for an actExplanation
Banking day refers to a day when a bank is regularly open for conducting various banking activities. This means that the bank is operational and accessible to customers for performing transactions, such as deposits, withdrawals, and other financial services. It does not include weekends or public holidays when the bank is closed. Therefore, the correct answer suggests that a banking day is a day when the bank is open and available for conducting banking operations.Rate this question:
-
- 8.
Nominated bank means the bank:
- A.
The bank that advise Letter of Credit
- B.
The issuing bank
- C.
LC available with
Correct Answer
C. LC available withExplanation
The term "nominated bank" refers to the bank where the Letter of Credit (LC) is available. This means that the LC can be accessed and used by the beneficiary through this bank. The nominated bank is responsible for advising the LC to the beneficiary and facilitating the transaction.Rate this question:
-
- 9.
A credit can neither be amended nor cancelled without the agreement of the following Parties:
- A.
The issuing bank & The confirming bank
- B.
The confirming bank & The beneficiary
- C.
The issuing, confirming bank & the beneficiary
Correct Answer
C. The issuing, confirming bank & the beneficiaryExplanation
In a credit transaction, the issuing bank is responsible for issuing the credit, the confirming bank provides a guarantee of payment to the beneficiary, and the beneficiary is the party who will receive payment. All three parties are involved in the credit process and their agreement is required to make any amendments or cancellations to the credit. Therefore, the correct answer is that the issuing bank, confirming bank, and beneficiary must all agree for a credit to be amended or cancelled.Rate this question:
-
- 10.
Advising bank means the bank that advises the credit at the request of the………………
- A.
The issuing bank
- B.
The confirming bank
- C.
The beneficiary
- D.
The applicant
Correct Answer
A. The issuing bankExplanation
The advising bank refers to the bank that provides advice or notification to the beneficiary regarding the credit, at the request of the issuing bank. The issuing bank is the bank that opens the letter of credit and is responsible for making payment to the beneficiary upon fulfillment of the specified terms and conditions. Therefore, the correct answer is the issuing bank.Rate this question:
-
- 11.
The expression “on or about” or similar will be interpreted:
- A.
Five calendar days before until five calendar days after the specified date (both start and end dates included)
- B.
Five calendar days before until five calendar days after the specified date (both start and end dates excluded)
- C.
10 calendar days after the specified date (both start and end dates included)
Correct Answer
A. Five calendar days before until five calendar days after the specified date (both start and end dates included)Explanation
The expression "on or about" or similar will be interpreted as a period of five calendar days before and after the specified date, with both the start and end dates included. This means that the time frame extends five days prior to the specified date and five days after it, encompassing a total of eleven days.Rate this question:
-
- 12.
Branches of a bank in different countries are considered to be ………………
- A.
Separate banks.
- B.
Same Banks
Correct Answer
A. Separate banks.Explanation
Branches of a bank in different countries are considered to be separate banks because each branch operates independently and has its own management, operations, and regulations. Although they may share the same name and be part of the same banking group, each branch is treated as a distinct entity with its own assets, liabilities, and financial responsibilities. This distinction is important for legal and regulatory purposes, as well as for risk management and financial reporting. Therefore, branches of a bank in different countries are considered to be separate banks.Rate this question:
-
- 13.
Terms such as “first class”, “well known”, “qualified”, “independent”, “official”, “competent” or “local” used to describe the issuer of a document allow…………………..
- A.
Any issuer including the beneficiary to issue that document.
- B.
Any issuer except the beneficiary to issue that document.
- C.
Any issuer to issue that document.
Correct Answer
B. Any issuer except the beneficiary to issue that document.Explanation
Terms such as "first class", "well known", "qualified", "independent", "official", "competent" or "local" used to describe the issuer of a document imply that the issuer should possess certain qualities or characteristics that make them suitable to issue the document. Therefore, the correct answer is that any issuer except the beneficiary can issue that document, as the beneficiary would not be considered independent or qualified to issue the document.Rate this question:
-
- 14.
Words such as “prompt”, “immediately” will be:
- A.
One day
- B.
One week
- C.
Disregarded
Correct Answer
C. DisregardedExplanation
Words such as "prompt" and "immediately" are disregarded. This means that they are not taken into consideration or ignored. These words do not hold any significance or importance in the context they are used in. Therefore, when encountering these words, they can be overlooked or not given any attention.Rate this question:
-
- 15.
The words “from” and “after” when used to determine a maturity date:
- A.
Exclude the date mentioned.
- B.
Include the date mentioned.
Correct Answer
A. Exclude the date mentioned.Explanation
When the words "from" and "after" are used to determine a maturity date, they indicate that the mentioned date should be excluded. This means that the maturity date will be calculated starting from the day after the mentioned date. For example, if a contract states that a payment is due 30 days from May 1st, the maturity date would be June 1st, not May 31st.Rate this question:
-
Quiz Review Timeline +
Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.
-
Current Version
-
Mar 21, 2023Quiz Edited by
ProProfs Editorial Team -
Jul 10, 2010Quiz Created by
Hussain1967
- Accounting Quizzes
- Advertising Quizzes
- Agriculture Quizzes
- Automotive Quizzes
- Brand Quizzes
- Business Accounting Quizzes
- Business Analyst Quizzes
- Business Development Quizzes
- Business Environment Quizzes
- Business Etiquette Quizzes
- Business Finance Quizzes
- Business Math Quizzes
- Business Organization Quizzes
- Business Plan Quizzes
- Business Process Quizzes
- Business Study Quizzes
- Business Technology Quizzes
- CEO Quizzes
- Collaboration Quizzes
- Company Quizzes
- Construction Quizzes
- Consumer Quizzes
- CSR Quizzes
- Customer Quizzes
- Customer Service Quizzes
- Development Quizzes
- Ecommerce Quizzes
- Employment Quizzes
- Entrepreneurship Quizzes
- Finance Quizzes
- Hospitality Quizzes
- Human Resources Quizzes
- Industry Quizzes
- International Business Quizzes
- Introduction To Business Quizzes
- Investment Quizzes
- Logistics Quizzes
- Management Quizzes
- Manufacturing Quizzes
- Marketing Quizzes
- Material Quizzes
- Media Quizzes
- Office Quizzes
- Organization Quizzes
- Principles Of Business Quizzes
- Printing Quizzes
- Product Quizzes
- Publishing Quizzes
- Real Estate Quizzes
- Retail Quizzes
- Sales Quizzes
- SAP Business One Quizzes
- Small Business Quizzes
- Source Quizzes
- Supply Quizzes
- Survey Quizzes
- Telecommunication Quizzes
- Trade Quizzes
- Training Quizzes
- Transportation Quizzes
- Warehouse Quizzes
- Welding Quizzes
Back to top