Question 1

The World Trade Organization is primarily concerned with:

Select one:
A. international contract law.
B. lowering of trade barriers.
C. providing international trade finance.
D. regulating international payments.

Question 2
All of the following are key indicators of economic risk except:
Select one:
A. employment levels.
B. GDP growth rates.
C. interest rates.
D. political system.

Question 3
Which of the following is not one of the main activities undertaken by the International Chamber of
Commerce?
Select one:
A. Dispute resolution.
B. Issuance of certificates of origin.
C. Policy advocacy.
D. Rule setting.

Question 4
The granting of intellectual property rights to an overseas manufacturer in exchange for a fee is known
as:
Select one:
A. franchising.
B. indirect selling.
C. licensing.
D. networking.

Question 5
Question text
Which of the following is an example of international trade?
Select one:
A. A foreign exchange contract.
B. Accountancy services provided locally in the same country.
C. French wine sold to distributors outside France.
D. Oil produced and sold across the USA.
Question 6
Reverse globalisation directly challenges which of the following theories or principles?
Select one:
A. Comparative Advantage
B. New Growth Theory
C. Rational Choice Theory
D. Rational Expectations Theory

Question 7
Which of the following is a credit rating agency?
Select one:
A. AIG.
B. Atradius.
C. Aviva.
D. Standard and Poor's.

Question 8
The fundamental mission of the International Chamber of Commerce is to:
Select one:
A. establish best practice at local chambers of commerce.
B. legislate on rules that govern international trade.
C. promote open international trade and investment.
D. provide specialist training and seminars on international trade.

Question 9
For a contract to be legally binding, its terms should include:
Select one:
A. consideration, offer and acceptance.
B. goods, offer and counter-offer.
C. negotiation, offer and capacity.
D. understanding, offer and acceptance.

Question 10
Which of the following countries has ratified the UN Convention on Contracts for the International Sale
of Goods?
Select one:
A. India.
B. South Africa.
C. United Kingdom.
D. United States of America.
Question 11
Which of the following is not one of the three recognised phases of money laundering?
Select one:
A. Integration.
B. Layering.
C. Obfuscation.
D. Placement.

Question 12
Which of the following statements regarding sanctions is correct?
Select one:
A. ICC rules, such as UCP 600, overrule sanctions.
B. Sanctions can only be applied to organisations and countries, not individuals.
C. Shipping via countries subject to sanctions could result in a breach of those sanctions.
D. SWIFT was designed specifically to screen for organisations on the UN terrorist financing list.

Question 13
The DOCDEX rules for dispute resolution were established by which of the following bodies?
Select one:
A. The International Chamber of Commerce.
B. The International Court of Arbitration.
C. The London Court of International Arbitration.
D. The World Trade Organization.

Question 14
Which of the following statements is incorrect?
 
Sanctions can:
Select one:
A. be both preventative and reactive in nature.
B. include both the freezing of assets and the cessation of cultural exchanges.
C. only be imposed on countries or organisations and do not extend to private individuals.
D. override the provisions of internationally recognised rules, such as UCP 600.

Question 15
The term ‘force majeure’ is applicable to a contract where the following apply, except:
Select one:
A. cost overruns.
B. natural disasters.
C. riots.
D. wars.
Question 16
The Model Law on International Commercial Arbitration was published by which of the following
bodies?
Select one:
A. International Chamber of Commerce
B. London Court of International Arbitration
C. UNCITRAL
D. World Trade Organisation

Question 17
Until the beneficiary gives written consent to cancel a guarantee, it will remain, from the bank's
perspective, a:
Select one:
A. bad debt.
B. banker's acceptance.
C. contingent liability.
D. discounted invoice.

Question 18
Which of the following is correct in respect of the advising, nominated and confirming bank in a
documentary credit?
Select one:
A. One bank may assume all three roles and responsibilities.
B. The applicant must bank with all three institutions.
C. The beneficiary must agree which banks are used.
D. To avoid conflicts of interest, separate banks must perform each role.

Question 19
Which of the following is true of both collections and documentary credits?
 
They both:
Select one:
A. are irrevocable instruments.
B. give assurance that the goods will be safe during shipment.
C. guarantee payment.
D. provide a basis for exchanging documents for payment.

Question 20
A documentary credit is issued on behalf of the:
Select one:
A. buyer.
B. seller.
C. buyer’s bank.
D. seller’s bank.
Question 21
Which of the following practices must apply for the beneficiary to be assured of payment under a
documentary credit?
Select one:
A. All documents submitted must comply with the credit.
B. The beneficiary must have an account with the issuing bank.
C. The goods must be of merchantable quality.
D. The terms of the underlying contract must be met.

Question 22
Which of the following types of documentary credit would be the most appropriate for a contract that
involves numerous and regular shipments?
Select one:
A. Back-to-back.
B. Red clause.
C. Revolving.
D. Transferable.

Question 23
Which of the following parties can never add their confirmation to a documentary credit?
 
The:
Select one:
A. advising bank.
B. issuing bank.
C. negotiating bank.
D. nominated bank.

Question 24
Which of the following is not a recognised role for a bank involved in a documentary credit transaction?
Select one:
A. Advising bank.
B. Reimbursing bank.
C. Remitting bank.
D. Transferring bank.
Question 25
A bank handling a term draft on behalf of the seller will first obtain the drawee’s acceptance and may
then:
 
1. discount it by immediately paying the seller the face value, less interest, representing the period
between the date of payment and the maturity date.
2. hold it until maturity, present it for payment and then remit the funds to the seller.
3. request a notary public to guarantee payment of the draft on the maturity date.
4. return it to the drawee for payment at maturity.
Select one:
A. 1 and 2 only.
B. 1 and 3 only.
C. 2 and 4 only.
D. 3 and 4 only.

Question 26
Which of the following parties would normally be the beneficiary of a standby letter of credit?
Select one:
A. Creditor.
B. Creditor's bank.
C. Debtor.
D. Debtor's bank.

Question 27
Company A contracts with Company B to build a bridge for Company B. Company B requires a guarantee
from its own bank as security. Under URDG 758, who is the guarantor?
Select one:
A. Company A.
B. Company B.
C. Company A’s bankers.
D. Company B’s bankers.

Question 28
An in-depth analysis of the trade cycle of a company enables the finance provider to understand the
needs of its clients in terms of all of the following except:
Select one:
A. finance.
B. payments.
C. product range.
D. risk mitigation
Question 29
A bill of exchange or draft can be associated with all of the following types of documentary
credit, except for credits available by:
Select one:
A. acceptance.
B. deferred payment.
C. negotiation.
D. sight payment.

Question 30
On-demand guarantees can provide an alternative method of obtaining payment should funds not be
forthcoming under the contract. Which of the following is not normally associated with this type of
guarantee?
Select one:
A. A demand statement from the beneficiary.
B. A law and jurisdiction clause.
C. An expiry date.
D. An undertaking to repay funds should the claim later be proved to be unjustified.

Question 31
Unless otherwise stated in the documentary credit, beneficiaries should normally present documents
under a documentary credit no later than how many calendar days after shipment?
Select one:
A. 10.
B. 14.
C. 21.
D. 30.

Question 32
ISP98 states that in the event of dishonour, timely notice must be given. In this context more than:
Select one:
A. 24 hours is unreasonable.
B. 48 hours is unreasonable.
C. 3 days is unreasonable.
D. 7 days is unreasonable.

Question 33
A guarantee issued by a bank in the beneficiary’s country, supported by a counter-guarantee from the
applicant’s bank, will usually be subject to:
Select one:
A. ISP98.
B. Local laws and customs.
C. UCP 600.
D. URDG 758.
Question 34
Which of the following is a recognised method of managing foreign exchange exposure?
 
Using:
Select one:
A. counter trade.
B. export credit insurance.
C. forward contracts.
D. invoice discounting.

Question 35
Documents are presented to a nominated bank on the morning of Tuesday 29 May. Applying the
maximum number of banking days allowed under UCP 600 for that bank to determine if a presentation
is compliant, what is the latest date on which the beneficiary can be notified of any discrepancies?
Select one:
A. Thursday 31 May.
B. Friday 1 June.
C. Monday 4 June.
D. Tuesday 5 June.

Question 36
Which of the following statements is correct when applied to a clean collection subject to URC 522?
 
Partial payment:
Select one:
A. may be accepted.
B. may never be accepted.
C. may only be accepted if specifically authorised in the instructions given to the collecting bank.
D. may only be accepted provided that the drawee undertakes to make payment of the remaining
balance within 30 calendar days.

Question 37
Goods should not be consigned to a bank without its prior approval. This statement is particularly
relevant to the ICC rules covering which of the following trade products?
Select one:
A. Bank payment obligations.
B. Documentary collections.
C. Documentary credits.
D. Forfaiting.
Question 38
Under UCP 600 a transferred credit must accurately reflect the terms and conditions of the credit. All of
the following may, however, be reduced or curtailed except the:
Select one:
A. expiry date.
B. latest date for shipment.
C. percentage of insurance cover.
D. unit price.

Question 39
In short-term trade finance, ‘commercial paper’ refers to:
Select one:
A. bills of lading.
B. eurobonds.
C. invoices.
D. promissory notes.

Question 40
Coface is a government organisation that specialises in:
Select one:
A. export credit insurance.
B. import logistics.
C. money laundering detection.
D. trade legislation.
he discounter of 'without recourse' finance is faced with which of the following risks?
 
The failure of the:
Select one:
A. original creditor if the current creditor defaults.
B. original creditor if the current debtor defaults.
C. original debtor if the current creditor defaults.
D. original debtor if the current debtor defaults.

Question 42
'Whole turnover' export insurance cover usually indemnifies exporters against between:
Select one:
A. 60-90% of the loss.
B. 70-100% of the loss.
C. 75-90% of the loss.
D. 80-95% of the loss.
Question 43
In both supplier and buyer credit facilities, a support agreement can be best described as:
Select one:
A. a counter-guarantee issued by the borrower’s bank underwriting the loan made.
B. a government agency’s guarantee to the lending bank for principal and interest.
C. documentation that gives the lending bank a lien over the assets of the borrower.
D. the lending bank’s commitment to finance the underlying transaction.

Question 44
Credit insurance from a government-backed agency will typically cover all of the following except:
Select one:
A. buyer insolvency.
B. changes to statute in the buyer's country.
C. natural disasters.
D. product liability.

Question 45
All of the following documentary credit availability options have the potential for conflict with the
principles of Islamic finance except for:
Select one:
A. acceptance.
B. deferred payment.
C. negotiation.
D. sight payment.

Question 46
Customer A buys goods on D/P collection terms for resale to a third party in the same country. Customer
A requires finance to bridge the gap between payment and receipt of funds from the ultimate buyer.
The most appropriate form of finance that customer A needs is:
Select one:
A. a factoring facility.
B. a medium-term loan.
C. a produce loan.
D. buyer credit.

Question 47
The term ‘open account’ is generally understood to mean all of the following except that:
Select one:
A. shipping documents are sent direct by the exporter to the importer outside of the banking system.
B. the importer’s bank does not make a conditional undertaking to pay upon fulfilment of specific
conditions by the exporter.
C. the importer settles with the exporter directly by clean payment at an agreed time.
D. the underlying goods are insured by the exporter to a minimum of level C of the General Cargo
Clauses.
Question 48
Supply chain finance is usually applied to which of the following methods of settlement?
Select one:
A. Advance payment
B. Documentary credit
C. Documentary collection
D. Open account trading

Question 49
Supply chain finance solutions are usually based on which of the following documents?
Select one:
A. Inspection certificate.
B. Insurance certificate.
C. Invoice.
D. Transport document.

Question 50
A minimum of how many links are usually involved in a physical supply chain?
Select one:
A. One
B. Two
C. Three
D. Four

Question 51
In a typical supply chain which of the following parties does not usually act as both a buyer and a seller?
Select one:
A. Manufacturer.
B. Raw material producer.
C. Retailer.
D. Wholesale distributor.

Question 52
Question text
The term ‘financial supply chain’ is used to describe the financial events that:
Select one:
A. take place aside from the physical supply chain.
B. crossover the physical supply chain.
C. disrupt the physical supply chain.
D. take place in parallel with the physical supply chain.
Question 53
In the information supply chain, which of the following documents will give the greatest level of comfort
to the finance provider?
Select one:
A. A carrier’s receipt.
B. A forwarder’s cargo receipt.
C. A 'received for shipment' bill of lading.
D. A 'shipped on board' bill of lading.

Question 54
From a supply chain finance perspective, when a carrier accepts goods for shipment and loads them on
to a vessel, the document that will evidence this event is a bill of lading that indicates that the goods
have been:
Select one:
A. received for shipment on to the named vessel.
B. received clean for shipment on to the named vessel.
C. shipped clean on board the named vessel.
D. shipped on board the named vessel

Question 55
A purchase order would be expected to include all of the following except:
Select one:
A. bank account details.
B. delivery details and shipment terms.
C. description of goods or services.
D. price and payment terms.

Question 56
Which of the following best describes the process where companies agree to trade on the basis of a
quotation given by the seller and an acceptance of that quotation by the buyer?
Select one:
A. Seller raises a bill of exchange drawn on the buyer, buyer accepts that bill of exchange.
B. Seller raises a promissory note, buyer signs that promissory note.
C. Seller issues a pro-forma invoice, buyer raises a purchase order.
D. Seller issues a purchase order, buyer raises a pro-forma invoice.

Question 57
The initial intervention by finance providers in the financial supply chain is usually driven by which of the
following?
Select one:
A. A commercial invoice.
B. A pro-forma invoice.
C. A purchase order.
D. A sales enquiry.
Question 58
Which of the following is not a factor within the physical supply chain that impacts upon a company’s
liquidity and working capital?
Select one:
A. Pre-contractual negotiation time.
B. Pre-shipment lead time.
C. Stockholding time.
D. Transit time.

Question 59
Analysing the qualitative detail of a company's trade cycle should examine all of the following except:
Select one:
A. dispute resolution.
B. nature of goods.
C. price volatility.
D. shipment methods.

Question 60
When a finance provider is contemplating the purchase of receivables it will usually take all of the
following into account except for confirmation that the receivable:
Select one:
A. exists.
B. has been quality inspected.
C. is assignable.
D. is enforceable against the debtor.

Question 61
If a bank issues a guarantee to release goods from the port and bills of lading are missing, what
document will it require its customer to sign?
Select one:
A. A counter-indemnity.
B. A letter of hypothecation.
C. A letter of pledge.
D. A promissory note.

Question 62
When is an ‘open policy’ of insurance most likely to be used?
Select one:
A. In open account trading.
B. When payment is to be made on credit terms.
C. When regular import or export trades are made.
D. When the export or import is an isolated transaction.
Question 63
Which of the following is a document of title, commonly used in international trade?
Select one:
A. Bill of exchange.
B. Bill of lading.
C. Promissory note.
D. Trust receipt.

Question 64
The contract terms are FCA 'Incoterms ® 2020'. Which of the following transport documents would be
acceptable to an importer?
Select one:
A. Air waybill, marked ‘freight collect'.
B. Air waybill, marked ‘freight paid’.
C. Bill of lading marked ‘freight paid’.
D. Bill of lading marked ‘freight payable at destination’.

Question 65
When will a term draft usually be paid?
Select one:
A. At sight.
B. If accepted, after the stipulated time period.
C. On acceptance.
D. On arrival of the documents at the importer’s bank.

Question 66
An accepted bill of exchange is held by the bank. What course of action is always appropriate for the
bank to take?
Select one:
A. Discount the bill if payment is refused at maturity.
B. Negotiate the bill if payment is refused at maturity.
C. Present the bill promptly for payment at maturity.
D. Protest the bill if payment is refused at maturity.

Question 67
Which of the following is an example of a financial document?
Select one:
A. Bill of lading.
B. Bill of sale.
C. Commercial invoice.
D. Promissory note.
Question 68
Which abbreviated Incoterm®2020 is associated with bulk and break-bulk trade?
Select one:
A. ExW
B. FAS.
C. FCA.
D. FOB.

Question 69
A certificate of origin that relates to imports into the European Union from countries with preferential
access is known as:
Select one:
A. ATR1.
B. certificate of value and origin (CVO).
C. EUR1.
D. GSP Form A.

Question 70
A consular invoice is normally signed by:
Select one:
A. a chamber of commerce in the exporting country.
B. a chamber of commerce in the importing country.
C. an embassy official of the exporting country.
D. an embassy official of the importing country.
Bills of lading are usually issued in sets of how many originals?
Select one:
A. One.
B. Two.
C. Three.
D. Four.

Question 72
A buyer wishes to avoid the risk of delay in collecting goods shipped on a short sea journey. Which of
the following transport documents will best suit those requirements?
Select one:
A. Bill of lading.
B. Charter party bill of lading.
C. Liner bill of lading.
D. Non-negotiable sea waybill.
Question 73
Which of the following would not be acceptable?
A bill of exchange drawn at:
Select one:
A. 30 days date.
B. 45 days after 24 June.
C. 60 days after arrival of vessel.
D. 90 days after sight.

Question 74
In relation to cargo that has been jettisoned to save a ship, the insurance term ‘general average’ can be
described as:
Select one:
A. a limit placed on the amount of loss that can be claimed by any one insured party.
B. requiring the insurance company to pay the insured party a minimum of a previously declared goods
value, plus 10%.
C. sharing the loss amongst all those whose goods were jettisoned.
D. sharing the loss between all those with goods on board.

Question 75
Which of the following is a transport document?
Select one:
A. CMR.
B. FCA.
C. FCR.
D. GSP.

Question 76
Which of the following statements are correct?
 
Air waybills:
 
1. are quasi-negotiable.
2. describe the goods and contain a contract of carriage.
3. evidence title to the goods.
4. are issued by the carrier or their agent.
Select one:
A. 1 and 2 only.
B. 1 and 3 only.
C. 2 and 4 only.
D. 3 and 4 only.

Question 77
The bank payment obligation has been developed to give an additional level of security to companies
selling on which of the following terms?
Select one:
A. Clean collection.
B. Documentary collection.
C. Documentary credit.
D. Open account.

Question 78
Which of the following processes enables a business to categorise data sources to get a better
understanding of its current associations and relationships and to predict future trends?
Select one:
A. Biometrics
B. Cognitive computing
C. Data mining
D. Transaction matching

Question 79
The bank that issues a Bank payment obligation (BPO) is known as the:
Select one:
A. applicant bank
B. committed bank
C. issuing bank
D. obligor bank

Question 80
The technique used by criminals to obtain unauthorised access to sensitive data held on computer
systems by posing as a trusted organisation is known as:
Select one:
A. Malware
B. Pharming
C. Phishing
D. Vishing
KCL Construction (UK) Ltd is considering entering into a competitive tender process for the supply of
blades for a wind farm project in Sweden. The contract is in US dollars and is structured so that:

 20% is paid in advance by the buyer within two months after any contract has been signed;
 20% is payable 60 days after shipment;
 20% is payable 90 days after shipment;
 20% is payable 120 days after shipment; and
 20% is to be retained for a period not to exceed 18 months after shipment or 12 months after
on-site testing, whichever is the sooner.
 
If the contract is awarded, the initial payment received will be used to make payments to component
suppliers in the UK and will require conversion into pounds sterling.
Question 81
KCL Construction (UK) Ltd has decided to cover the exchange risk for the initial payment that will arise,
should the contract be awarded by entering into a pure option. Which of the following set of terms
correctly describes the nature of the pure option that the company will require, to sell a fixed amount of
US dollars for pounds sterling at any date prior to the maturity date of the pure option?
Select one:

A. A European call option.

B. A European put option.

C. An American call option.

D. An American put option.

Question 82
As part of the tender process, KCL Construction (UK) Ltd is required to submit a guarantee in support of
its tender, which is to be issued in a standard format by a bank in Sweden. If the overall contract value is
USD2,000,000, which of the values stated below will fall within the typical range for the value of a
tender guarantee?
Select one:

A. Up to USD100,000.

B. USD100,000 to 200,000.

C. USD200,000 to 300,000.

D. USD300,000 or more.

Question 83
The buyer has stated that the payments due at staged intervals of 60, 90 and 120 days after shipment
will be managed through a documentary credit. KCL Construction (UK) Ltd will require immediate access
to these funds. How could the credit be best constructed to achieve this?
 
Available with:
Select one:

A. any bank by negotiation.

B. the advising bank by acceptance.

C. the confirming bank by acceptance.

D. the issuing bank by acceptance.

Question 84
KCL Construction (UK) Ltd has been advised that the terms of trade will be CFR to a Swedish port. Which
of the following best describes that Incoterm ® 2020 arrangement?
 
The seller will usually be responsible for insuring the goods until:
Select one:

A. arrival in Sweden, and the delivery risk for the goods passes to the buyer upon arrival in Sweden.

B. arrival in Sweden, and the delivery risk for the goods passes to the buyer when the goods are loaded
on board a vessel at the port of loading.

C. they are on board the vessel at the port of loading, and the delivery risk for the goods passes to the
buyer upon arrival in Sweden.

D. they are on board the vessel at the port of loading, and the delivery risk for the goods passes to the
buyer when the goods are loaded on board a vessel at the port of loading.

Question 85
During preliminary discussions with the buyer, KCL Construction (UK) Ltd has been assured that should
the wind turbines operate as expected, then the monies due to be paid at the end of the contract term
could be paid in advance of this date, provided that a guarantee has been issued in KCL Construction’s
favour. This type of guarantee is best described as:
Select one:

A. a performance guarantee.

B. a retention guarantee.

C. a trade debt guarantee.

D. an advance payment guarantee.

QT Telecommunications Ltd is looking for a supplier of mobile phone antennae to upgrade its existing
technology. Having dealt with your company on previous occasions, it has approached you to source the
goods on its behalf. It is willing to pay USD100,000 for goods to be shipped on a CIF basis.
 You have found a reputable supplier, PC Technologies Inc, which is able to produce the goods in the
quantity required and it will only charge your company USD80,000 for the goods. It is, however, insisting
on a guarantee of payment before it will ship the goods to the required destination.
 Your company does not have the capital to be able to make this payment or to raise a documentary
credit in its favour, and you have asked QT Telecommunications Ltd to raise a transferable letter of
credit in your favour for USD100,000.
Question 86
A transferable letter of credit is one where:
Select one:

A. a new and separate letter of credit is raised on the back of the existing letter of credit.

B. all rights under the existing letter of credit transfer automatically to a second beneficiary.

C. documents are presented by the beneficiary under the existing letter of credit and the monies due are
transferred in part to a stated third party.

D. the existing letter of credit is made available in part or in whole to a second beneficiary.

Question 87
The transferable letter of credit requires presentation of an insurance certificate for the CIF value of the
goods plus 10%. Given that the credit will be transferred in favour of PC Technologies Inc, in the amount
of USD80,000, then what percentage cover over the invoice value of USD80,000 must the insurance
document be made out for to ensure that there is no discrepancy upon substitution of documents by
your company given that the insurance cover will need to reflect your commitment to insure the goods
at 10% above your invoice value of USD100,000?
Select one:

A. 19%.

B. 27%.

C. 38%.

D. 46%.
Question 88
Which of the following documents, required by the terms of the transferable letter of credit, will your
company be invited to substitute when the credit has been transferred to and subsequently utilised by
PC Technologies Inc.?
 1. Draft
2. Commercial Invoice
3. Packing List
4. Beneficiary Certificate
Select one:

A. 1 and 2 only.

B. 1 and 4 only.

C. 1, 2, 3 only.

D. 1, 2, 3 and 4.

Question 89
Which of the following factors may not be altered at the request of your company upon transfer of the
credit to PC Technologies Inc?
Select one:

A. The expiry date.

B. The last date for presentation.

C. The latest shipment date.

D. The stated Incoterm®.

Question 90
Compliant documents are presented for USD80,000 by PC Technologies Inc and your company is unable
to raise documents for substitution. What will happen with the payment of monies due under the
credit?
Select one:

A. PC Technologies Inc will raise a replacement invoice (and draft, if any) for USD100,000. QT
Telecommunications Ltd will be debited USD100,000 by the issuing bank and PC Technologies Inc will be
paid USD100,000.

B. QT Telecommunications Ltd will be debited USD80,000 by the issuing bank and PC Technologies Inc
will be paid USD80,000.

C. QT Telecommunications Ltd will be debited USD100,000 by the issuing bank, PC Technologies Inc will
be paid USD80,000 and your company will be paid USD20,000.

D. QT Telecommunications Ltd will be debited by the issuing bank with USD100,000 and PC Technologies
Inc. will get paid USD100,000.

RFT Solutions Ltd has developed portable solar-powered technology units that it believes will
revolutionise the lives of people living in remote communities who have no access to electricity.
 Interest in the product is high and the company is looking for a quick route to market in countries with
which it has no previous trading experience. A number of these countries have weak economies and
access to foreign exchange is severely restricted, so RFT Solutions Ltd needs to look for innovative
solutions that will enable it to establish trading relationships.
Question 91
Question text
RFT Solutions Ltd is keen to consider appointing a local distributor to act on its behalf. A distributor
will not usually:
Select one:

A. manufacture the goods locally.

B. provide after-sales support.

C. purchase the goods outright.

D. set the selling price of the goods.

Question 92
A government official in one of the countries targeted by RFT Solutions Ltd has advised that foreign
exchange approval for transactions will be granted provided the company is prepared to enter into a
binding counter-purchase agreement. Such an arrangement would result in:
Select one:

A. a barter agreement being entered into, with an agreed cash balance being paid to RFT Solutions Ltd.

B. the insertion of a buyback clause into the contract, resulting in RFT Solutions Ltd making a counter-
payment for any goods that remain unsold by the buyer.

C. the value of the goods sold by RFT Solutions Ltd being paid for, in full, with a counter-contract being
signed to buy unrelated goods produced within that country.

D. the value of the goods sold by RFT Solutions Ltd being paid for in part by the proceeds raised by the
sale of unrelated goods back to RFT Solutions Ltd.

Question 93
RFT Solutions Ltd’s local agent has been holding discussions with a number of local manufacturers in the
region with a view to establishing a co-operative agreement. The agreement would give easier access to
that market and other neighbouring countries through the establishment of a new legal entity in the
region, thereby giving RFT Solutions Ltd a local manufacturing presence. This form of agreement is
known as:
Select one:

A. a joint venture.

B. an indirect export agreement.

C. direct outsourcing.

D. franchising.

Question 94
RFT Solutions Ltd's preference is to retain control of the manufacture of the goods and agree individual
contracts with buyers in each of its target markets. Given the weak state of the economies of the
countries with which it is looking to trade, which of the following products should it insist upon as an
essential part of any contract?Select one:

A. Clean collection.

B. Confirmed documentary credit.

C. Documentary credit.

D. Performance guarantee.

Question 95
RFT Solutions Ltd is also considering insuring against the risk of non-payment through government-
backed insurance schemes. Such schemes will generally not cover: Select one:

A. buyer insolvency.

B. damage or loss of goods in transit.

C. moratorium placed on contractual payments.

D. natural disasters that prevent performance.

Touche Clothing Company Ltd has established itself as a major designer label for fashion-conscious
teenagers in the UK and has recently begun exporting its clothing range to Streetside Kidz, a chain of
upmarket clothing retailers in Canada.
Question 96
Touche Clothing Company Ltd's terms for payment are 90 days after shipment on a 'documents against
acceptance' basis. This terminology is most often associated with:
Select one:

A. documentary collections.

B. documentary credits.

C. forfaiting.

D. open account trading.

Question 97
Touche Clothing Company Ltd requires an additional form of payment guarantee to be given by the
bankers of Streetside Kidz before the underlying documentation is released. This is often referred to as:
Select one:

A. avalisation.

B. confirmation.

C. factorisation.

D. secondary acceptance.

Question 98
Touche Clothing Company Ltd delivers goods to a shipping company at a port in the UK nominated by
the buyer, for dispatch by sea to the Toronto port. The transport document that Touche Clothing
Company Ltd will be most likely to receive is a:
Select one:

A. bill of lading.

B. charter party bill of lading.

C. multimodal transport document.

D. non-negotiable sea waybill.

Question 99
Touche Clothing Company Ltd will discharge its delivery obligations by delivery of the goods to the
named port and loading on a vessel. The Incoterm®2020 that will apply in these circumstances is:
Select one:

A. DPU.

B. FAS.

C. FCA.

D. FOB.

Question 100
The contract signed between Touche Clothing Company Ltd and Streetside Kidz requires all goods to be
available for shipment within 30 days after an order has been placed. Production issues delayed the
completion of the latest order and consequently Touche Clothing Company Ltd is contractually obliged
to ship the goods at its expense to Toronto airport and insure the goods to that point.
 
From the information given, the Incoterm® 2020 that is most likely to apply in these circumstances is:
Select one:

A. CIF.

B. CIP.

C. DAP.

D. DDU.