CAIIB Paper 2 Module A Quiz 5

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Question 1 of 20

1. Question
Issuing bank: A complying presentation under an irrevocable LC creates an undertaking for the:
- Customs authority to pay the exporter
- SWIFT network to fund the transaction
- Importer to waive all claims on goods
- Issuing bank, according to the credit terms and applicable rules
Correct

The issuing bank‘s undertaking is documentary and governed by the credit and applicable rules.

Incorrect

The issuing bank‘s undertaking is documentary and governed by the credit and applicable rules.

Unattempted

The issuing bank‘s undertaking is documentary and governed by the credit and applicable rules.
Question 2 of 20

2. Question
Issuing bank — application: Which statement is most accurate in a CAIIB banking scenario concerning issuing bank?
- Customs authority to pay the exporter
- SWIFT network to fund the transaction
- Importer to waive all claims on goods
- Issuing bank, according to the credit terms and applicable rules
Correct

The issuing bank‘s undertaking is documentary and governed by the credit and applicable rules. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.

Incorrect

The issuing bank‘s undertaking is documentary and governed by the credit and applicable rules. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.

Unattempted

The issuing bank‘s undertaking is documentary and governed by the credit and applicable rules. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.
Question 3 of 20

3. Question
Advising bank: An advising bank primarily:
- Guarantees payment in every case
- Becomes the applicant
- Authenticates/advises the credit without automatically adding its own payment undertaking
- Inspects all goods physically
Correct

Advising a credit does not itself make the bank a confirming bank or add a payment undertaking.

Incorrect

Advising a credit does not itself make the bank a confirming bank or add a payment undertaking.

Unattempted

Advising a credit does not itself make the bank a confirming bank or add a payment undertaking.
Question 4 of 20

4. Question
Advising bank — application: Which statement is most accurate in a CAIIB banking scenario concerning advising bank?
- Guarantees payment in every case
- Inspects all goods physically
- Becomes the applicant
- Authenticates/advises the credit without automatically adding its own payment undertaking
Correct

Advising a credit does not itself make the bank a confirming bank or add a payment undertaking. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.

Incorrect

Advising a credit does not itself make the bank a confirming bank or add a payment undertaking. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.

Unattempted

Advising a credit does not itself make the bank a confirming bank or add a payment undertaking. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.
Question 5 of 20

5. Question
Confirming bank: A confirming bank adds:
- A tax exemption
- A fixed exchange rate
- A guarantee of product quality
- Its own independent undertaking to honour/negotiate a complying presentation as applicable
Correct

Confirmation adds the confirming bank‘s undertaking to that of the issuing bank, subject to the credit terms.

Incorrect

Confirmation adds the confirming bank‘s undertaking to that of the issuing bank, subject to the credit terms.

Unattempted

Confirmation adds the confirming bank‘s undertaking to that of the issuing bank, subject to the credit terms.
Question 6 of 20

6. Question
Confirming bank — application: Which statement is most accurate in a CAIIB banking scenario concerning confirming bank?
- A guarantee of product quality
- Its own independent undertaking to honour/negotiate a complying presentation as applicable
- A fixed exchange rate
- A tax exemption
Correct

Confirmation adds the confirming bank‘s undertaking to that of the issuing bank, subject to the credit terms. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.

Incorrect

Confirmation adds the confirming bank‘s undertaking to that of the issuing bank, subject to the credit terms. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.

Unattempted

Confirmation adds the confirming bank‘s undertaking to that of the issuing bank, subject to the credit terms. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.
Question 7 of 20

7. Question
Sight credit: A sight LC generally calls for payment:
- Only after the goods are resold
- At sight after a complying presentation and required examination
- Before the credit is issued in every case
- Only one year after shipment
Correct

Sight credits call for payment upon a complying presentation in accordance with the credit and applicable rules.

Incorrect

Sight credits call for payment upon a complying presentation in accordance with the credit and applicable rules.

Unattempted

Sight credits call for payment upon a complying presentation in accordance with the credit and applicable rules.
Question 8 of 20

8. Question
Sight credit — application: Which statement is most accurate in a CAIIB banking scenario concerning sight credit?
- Before the credit is issued in every case
- Only one year after shipment
- Only after the goods are resold
- At sight after a complying presentation and required examination
Correct

Sight credits call for payment upon a complying presentation in accordance with the credit and applicable rules. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.

Incorrect

Sight credits call for payment upon a complying presentation in accordance with the credit and applicable rules. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.

Unattempted

Sight credits call for payment upon a complying presentation in accordance with the credit and applicable rules. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.
Question 9 of 20

9. Question
Usance credit: A usance/deferred-payment credit provides payment:
- Without any documents
- At an agreed future maturity or tenor
- Only before shipment
- Always as an advance to exporter
Correct

Usance credits provide for payment at a future date specified by the credit.

Incorrect

Usance credits provide for payment at a future date specified by the credit.

Unattempted

Usance credits provide for payment at a future date specified by the credit.
Question 10 of 20

10. Question
Usance credit — application: Which statement is most accurate in a CAIIB banking scenario concerning usance credit?
- Without any documents
- At an agreed future maturity or tenor
- Always as an advance to exporter
- Only before shipment
Correct

Usance credits provide for payment at a future date specified by the credit. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.

Incorrect

Usance credits provide for payment at a future date specified by the credit. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.

Unattempted

Usance credits provide for payment at a future date specified by the credit. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.
Question 11 of 20

11. Question
Bill of lading: A bill of lading may serve as:
- A capital adequacy return
- Evidence of receipt/shipment, carriage contract evidence and potentially a document of title
- A currency forward contract
- A certificate of tax residency
Correct

A bill of lading has multiple transport/documentary functions; its title function depends on its form and governing law.

Incorrect

A bill of lading has multiple transport/documentary functions; its title function depends on its form and governing law.

Unattempted

A bill of lading has multiple transport/documentary functions; its title function depends on its form and governing law.
Question 12 of 20

12. Question
Bill of lading — application: Which statement is most accurate in a CAIIB banking scenario concerning bill of lading?
- A capital adequacy return
- Evidence of receipt/shipment, carriage contract evidence and potentially a document of title
- A certificate of tax residency
- A currency forward contract
Correct

A bill of lading has multiple transport/documentary functions; its title function depends on its form and governing law. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.

Incorrect

A bill of lading has multiple transport/documentary functions; its title function depends on its form and governing law. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.

Unattempted

A bill of lading has multiple transport/documentary functions; its title function depends on its form and governing law. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.
Question 13 of 20

13. Question
D/P collection: Under documents against payment, documents are generally released against:
- Payment by the drawee
- Shipment alone
- Acceptance of a time bill without payment
- A court decree
Correct

D/P means the collecting bank releases documents against payment, subject to instructions and applicable rules.

Incorrect

D/P means the collecting bank releases documents against payment, subject to instructions and applicable rules.

Unattempted

D/P means the collecting bank releases documents against payment, subject to instructions and applicable rules.
Question 14 of 20

14. Question
D/P collection — application: Which statement is most accurate in a CAIIB banking scenario concerning d/p collection?
- Shipment alone
- Acceptance of a time bill without payment
- A court decree
- Payment by the drawee
Correct

D/P means the collecting bank releases documents against payment, subject to instructions and applicable rules. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.

Incorrect

D/P means the collecting bank releases documents against payment, subject to instructions and applicable rules. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.

Unattempted

D/P means the collecting bank releases documents against payment, subject to instructions and applicable rules. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.
Question 15 of 20

15. Question
D/A collection: Under documents against acceptance, documents are released against:
- Immediate full cash payment in every case
- Acceptance of a time draft
- A SWIFT guarantee
- A customs certificate only
Correct

D/A permits release against acceptance; the exporter may still face non-payment risk at maturity.

Incorrect

D/A permits release against acceptance; the exporter may still face non-payment risk at maturity.

Unattempted

D/A permits release against acceptance; the exporter may still face non-payment risk at maturity.
Question 16 of 20

16. Question
D/A collection — application: Which statement is most accurate in a CAIIB banking scenario concerning d/a collection?
- Acceptance of a time draft
- A customs certificate only
- Immediate full cash payment in every case
- A SWIFT guarantee
Correct

D/A permits release against acceptance; the exporter may still face non-payment risk at maturity. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.

Incorrect

D/A permits release against acceptance; the exporter may still face non-payment risk at maturity. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.

Unattempted

D/A permits release against acceptance; the exporter may still face non-payment risk at maturity. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.
Question 17 of 20

17. Question
URC 522: URC 522 primarily governs:
- Currency options
- NRI interest rates
- Documentary collections when incorporated into the instruction
- Documentary credits in every case
Correct

ICC‘s URC 522 contains rules for collections and applies when incorporated into the collection instruction.

Incorrect

ICC‘s URC 522 contains rules for collections and applies when incorporated into the collection instruction.

Unattempted

ICC‘s URC 522 contains rules for collections and applies when incorporated into the collection instruction.
Question 18 of 20

18. Question
URC 522 — application: Which statement is most accurate in a CAIIB banking scenario concerning urc 522?
- Documentary collections when incorporated into the instruction
- Currency options
- Documentary credits in every case
- NRI interest rates
Correct

ICC‘s URC 522 contains rules for collections and applies when incorporated into the collection instruction. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.

Incorrect

ICC‘s URC 522 contains rules for collections and applies when incorporated into the collection instruction. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.

Unattempted

ICC‘s URC 522 contains rules for collections and applies when incorporated into the collection instruction. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.
Question 19 of 20

19. Question
Packing credit: Packing credit is generally:
- Pre-shipment finance for eligible export preparation and production
- A loan to importer after goods arrive
- A payment message type
- A foreign-currency deposit
Correct

Packing credit supports eligible pre-shipment export activity; post-shipment finance is separate.

Incorrect

Packing credit supports eligible pre-shipment export activity; post-shipment finance is separate.

Unattempted

Packing credit supports eligible pre-shipment export activity; post-shipment finance is separate.
Question 20 of 20

20. Question
Packing credit — application: Which statement is most accurate in a CAIIB banking scenario concerning packing credit?
- Pre-shipment finance for eligible export preparation and production
- A foreign-currency deposit
- A payment message type
- A loan to importer after goods arrive
Correct

Packing credit supports eligible pre-shipment export activity; post-shipment finance is separate. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.

Incorrect

Packing credit supports eligible pre-shipment export activity; post-shipment finance is separate. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.

Unattempted

Packing credit supports eligible pre-shipment export activity; post-shipment finance is separate. In an exam scenario, apply the principle to the transaction facts and check the current RBI/FEMA or ICC rule where the question is regulatory.