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Transcript of CDCS Study Guide
1
Certified DocumentaryCredit Specialist
(CDCS)Study Guide
Institute of Financial ServicesIFS House, 4-9 Burgate LaneCanterbury, Kent CT1 2XJ
United Kingdom
Telephone: (+44) (0) 1227 762600Fax: (+44) (0) 1227 763788
International Financial Services Association9 Sylvan Way, Suite 130
Parsippany, New Jersey 07054USA
Telephone (973) 656-1900Fax: (973) 656-1915
http:/www.ifsaonline.org
The ifs is the official brand of The Chartered Institute of Bankers, a registered charity.
Contents page
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Apart from any fair dealing for the purpose of research or private study, or criticismor review, as permitted under the Copyright, Designs and Patents Act 1988, thispublication may be reproduced, stored or transmitted, in any form or by any means,only with the prior permission in writing of the publisher, or in the case of reprographicreproduction in accordance with the terms and licences issued by the CopyrightLicensing Agency. Enquiries concerning reproduction outside those terms should beaddressed to the publisher’s agents at the address below:
Institute of Financial ServicesIFS House4-9 Burgate LaneCanterburyKentCT1 2XJ
T 01227 818649F 01227 479641E [email protected]
The Chartered Institute of Bankers believes that the sources of information uponwhich the book is based are reliable and has made every effort to ensure thecomplete accuracy of the text. However, neither CIB, the authors nor anycontributor can accept any legal responsibility whatsoever for consequences thatmay arise from errors or omissions or any opinion or advice given.
Typeset by Kevin O’ConnorPrinted in China through Printworks Int Ltd
© The Chartered Institute of Bankers 2004, with the exception of North andSouth America wherein copyright lies with the International Financial ServicesAssociation 2004
S c h o o l o f F i n a n c e
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September 2004
Dear CDCS Candidate
Welcome. You made a significant commitment to your career when you registeredfor the CDCS examination. This Self-Study Guide has been prepared with your successin mind. It will help you make the transition from the CDCS Content Outline andthe Study Text; in addition, it will outline a variety of study techniques for yourconsideration.
The text for the CDCS examination has been updated and revised and published asThe Guide to Documentary Credits: second edition. There are changes to the ContentOutline, including the rules, as well as updating to the general text. It is importantthat you study the second edition as you prepare for the examination. The text andContent Outline contain two new regulations that are covered in the Signpost articlereproduced at the end of Section 2 in this guide.
If it has been a few years since you last studied for an examination, a review of thispublication will help you identify the areas you will find helpful as you develop yourindividual study plan. Experiment to find out what suits you best.
The CDCS examination is based on a Job Analysis Study that identified the knowledgeand skills required for competent practice in the field of Documentary Credits. TheContent Outline details the results of the survey and the Study Text is based on theContent Outline. You can build on the information and experience you have, as youare involved with Documentary Credit practice.
As you can see from the Table of Contents there are many different areas that willbe of assistance to you as you prepare to study for the CDCS examination; not allmay apply to you. Your first step will be to identify those sections that you want toinclude in your study plan.
Sections 2 and 3 contain the CDCS Content Outline and Examination Specifications.These two documents are the basis for the CDCS examination and should be reviewedin depth.
The CDCS examination is an opportunity for you to demonstrate what you knowand your skills as a Documentary Credit Specialist. We wish you success in yourpreparation for the examination.
There are several products that will assist you as you prepare for the CDCSexamination:
the Study Text is the basic reference for the examination; all multiple-choicequestions are documented to this text;
CDCS study guide
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CDCS calculator: in the US a CDCS calculator will be mailed with your admissionticket. It will be provided on the examination day at CIB centers. Becomefamiliar with the CDCS calculator, as it is the only calculator allowed at theexamination centers;
CDCS website (www.cdcs.org): information will be posted on the website as itbecomes available. This will be a source of continuing help to you as you preparefor the examination.
Gavin Shreeve Dan Taylor
Chief Executive PresidentInstitute of Financial Services International Financial Services Association
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Table of Contents
◆◆◆◆◆ Introduction
◆◆◆◆◆ Section l: CDCS Study Text
◆◆◆◆◆ Section 2: CDCS Content Outline
CDCS Signpost Article
◆◆◆◆◆ Section 3: CDCS Examination Specifications
◆◆◆◆◆ Section 4: Self-assessment Tool
◆◆◆◆◆ Section 5: Key Terms
◆◆◆◆◆ Section 6: Planning Your Study
Study Plan
◆◆◆◆◆ Section 7: Keys to Studying for Success
◆◆◆◆◆ Section 8: CDCS Study Groups
◆◆◆◆◆ Section 9: Multiple-choice Question Formats
◆◆◆◆◆ Section 10: Simulation Exercises
◆◆◆◆◆ Section 11: Tips for Answering Multiple-choice Questions
◆◆◆◆◆ Section 12: Pre-examination Check List
◆◆◆◆◆ Section 13: Sample Answer Sheet
◆◆◆◆◆ Section 14: Sample Test
◆◆◆◆◆ Section 15: Scoring the Examination
◆◆◆◆◆ Section 16: Answers to Sample Test
◆◆◆◆◆ Section 17: CDCS Website
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Introduction
Volunteers Associated with the CDCS Project
The Certified Documentary Credit Specialist (CDCS) credential is a peer-reviewproject that includes volunteers in each segment of its development. It is a jointproject of the Chartered Institute of Bankers (CIB) in the UK, and the InternationalFinancial Services Association (IFSA) in the US and is endorsed by the InternationalChamber of Commerce (ICC). There are several volunteer-intensive phases of theproject and they include:
Job Analysis Study: volunteers identified the major responsibilities of aDocumentary Credit Specialist. They also detailed the knowledge and experiencerequired to meet these responsibilities competently. The Job Analysis Studyserves as the basis of the CDCS Content Outline and the ExaminationSpecifications;Study Text: The Guide to Documentary Credits: second edition is the referencetext for the CDCS examination. It is based on the Content Outline and wasreviewed by volunteers who served as topic experts;Test Development: volunteers who write, review and revise the questionsdevelop the CDCS examination. This is a very intensive responsibility and thecommittee meets annually to prepare for each examination administration.
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CDCS Program Volunteers
Maria Adamczyk, CDCS — Chase Manhattan Bank
Lowell Campbell, CDCS — Chase Bank
Steve Cooke, CDCS — Standard Chartered Bank
Barbara Lotrionte, CDCS — Fleet Bank of Massachusetts
David Morrish, CDCS – Lloyds TSB Bank plc
Rita Nielsen, CDCS -Wells Fargo HSBC Trade Bank
Tineke Overvliet, CDCS – DHB Bank
Victor Pena, CDCS – Citicorp
Steve Thompson, CDCS - Standard Chartered Bank
Gareth Watts, CDCS – JP Morgan Chase Bank
Charnell Patrick Williams, CDCS — Citicorp
Paul Williamson, CDCS – JP Morgan Chase Bank
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Section 1
CDCS Study Text
The Study Text for the CDCS examination is The Guide to Documentary Credits:second edition by Steve Berrisford, CDCS.
The text was reviewed by ifs and IFSA volunteers and produced by the CIB and IFSA.The Study Text is intended to assist CDCS candidates prepare for the examination.The text is based on the CDCS Content Outline (see Section 2); the Content Outlinedetails the knowledge and skills identified in a Job Analysis Study as necessary to fulfillthe major responsibilities of a Documentary Credit practitioner. A thoroughunderstanding of the topics covered in the CDCS Content Outline should result insuccess on the CDCS examination.
Examination questions in the first section of the examination are referenced to theStudy Text. Questions in the Simulation portion of the examination are based on theanalysis and application of the information in the Study Text to actual situations.
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Section 2
CDCS Content Outline – Summary
A. Documentary Credit Groups1 Types and Uses of Documentary Credits2 Parties to the Credit: Roles, Responsibilities and Risks3 Types of Payment
B. Characteristics of Documentary Credits1 Primary Characteristics2 Specialty Characteristics
C. Operations1 Processes2 Related Products/Terms
D. Financial and Commercial Documents
E. Rules
CDCS Content Outline
A. Documentary Credit Groups1 Types and Uses of Documentary Credits
a Commercialb Standby
2 Parties to the Credit: Roles, Responsibilities and Risksa Required Parties
(1) Issuing Bank(2) Beneficiary
b Applicant
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c Banks’ Roles and Obligations(1) Issuing Bank(2) Confirming Bank(3) Advising Bank(4) Negotiating Bank(5) Paying Bank(6) Accepting Bank(7) Reimbursing Bank
d Types of Risk(1) Operational/UCP500(2) Credit(3) Foreign Exchange(4) Fraud(5) Legal(6) Political
3 Types of Paymenta Sightb Deferredc Negotiationd Acceptance
B. Characteristics of Documentary Credits1 Primary Characteristics
a Revocableb Irrevocable
2 Specialty Characteristicsa Revolving Credits
(1) Cumulative vs Non-cumulative(2) Automatic vs Controlled
b Instalmentc. Advance Paymentsd Transferablee Evergreenf. Cleang. Direct pay
C. Operations1 Processes
a Issueb Pre-advisec Advised Confirme Amendf Transferg Present
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h Examinei Pay/Rejectj Claimk Reimburse Fundsl Cancel
2 Related Products/Termsa Letter of Indemnityb Air Way Releasec Steamship Guaranteed Assignment of Proceedse Participation and Syndicationf Trade-related Incoterms
D. Financial and Commercial Documents1 Draft/Bill of Exchange2 Commercial Invoice3 Ocean/Marine Port-to-port Bill of Lading4 Non-negotiable Seaway Bill5 Charter Party Bill of Lading6 Multimodal Transport Document7 Air Transport Document8 Road, Rail or Inland Waterway Transport Document9 Forwarder’s Cargo Receipt, Mate’s Receipt and Consolidator’s Receipt10 Post Receipt or Certificate of Posting11 Courier or Expedited Delivery Service Document12 Insurance Document13 Weight Certificate14 Certificate of Origin15 Packing Lists16 Inspection Certificate17 Other Documents
E. Rules1 UCP 500 – Uniform Customs and Practice for Documentary Credits2 ISP98 – International Standby Practices3 URR 525 – Uniform Rules for Bank-to-Bank Reimbursements under
Documentary Credits4 UCP500 subarticle 20(b) – Decision on Original Documents5 ICC Position Papers 1 – 46 ISBP - International Standard Banking Practice for the Examination of
Documents under Documentary Credits7 eUCP – Supplement to UCP500 for Electronic Presentations
CDCS content outline
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CDCS Signpost Article
The following article has been prepared by Steve Berrisford CDCS, the author of TheGuide to Documentary Credits: second edition, and explains the significance of thechanges made to the CDCS Content Outline in 2005.
April 2004 saw the culmination of another successful year’s study with the numbersin the ranks of Certified Documentary Credit Specialists rising to almost 2,500,geographically spread across more than 60 countries.
Since its inauguration in May 1999 as the first internationally recognized standard forDocumentary Credits the CDCS examination has gone some way towards achievingits two main aims of:
providing an internationally recognized benchmark qualification forcompetence in handling documentary credits;promoting uniformity in the interpretation and usage of Documentary Credits.
To ensure that these aims remain current the CDCS Board regularly reviews theDocumentary Credits job description by way of a job analysis survey. This survey isused to gather information from a representative sample of active DocumentaryCredit practitioners working in a number of different locations, and from its resultsthe examination content outline (syllabus) is reviewed and revised as necessary. As aresult of the latest survey candidates preparing for the 2004 examination should notethat the following topics will be included in the revised Content Outline from whichquestions may be drawn.
1.International Standard Banking Practice for the Examination of Documents underDocumentary Credits (ISBP).
2.The Supplement to the Uniform Customs and Practice for Documentary Creditsfor Electronic Presentations (eUCP).
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The purpose of this article is to raise the awareness of the need for students toinclude these topics in their study and revision schedules, and to set out some of thekey points relating to this new subject matter.
ISBP
Candidates studying for the examination will be familiar with the following extractfrom UCP 500 article 13a:
Compliance of the stipulated documents on their face with the termsand conditions of the Credit shall be determined by internationalstandard banking practice as reflected in these Articles.
In order to provide amplification and improve consistency in application of internationalstandard banking practice in 2004 the ICC Banking Commission published the‘International Standard Banking Practice for the Examination of Documents underDocumentary Credits (ISBP)’. This document explains how practices articulated inUCP500 are to be applied by Documentary Credit practitioners, and is consistentwith the Opinions and Decisions of the Banking Commission.
CDCS candidates will need to study the content of the 200 numbered paragraphsthat make up ISBP. These are structured as follows:
preliminary considerations that relate to the application and issuance of credits(paragraphs 1 to 5);general principles that are not specific to any one article of UCP 500 or any onedocument (paragraphs 6 to 44);practices that are clearly linked to a named type of document –– drafts (paragraphs 45 to 58);– invoices (paragraphs 59 to 72);– transport documents (paragraphs 73 to 182);– insurance documents (paragraphs 183 to 195);– certificates of origin (paragraphs 196 to 200).
eUCP
As we reached the end of the 20th century it was recognized by the ICC BankingCommission that the global trading community using Documentary Credits werebeing presented with an increasing range of potential electronic solutions for thepreparation and transmission of documentation. As a consequence of this it followedthat there was a need to expand the reach of UCP 500 to provide it with theflexibility not only to cater for traditional paper documentation transactions but alsofor dematerialized documentation transactions transmitted electronically. At midnight
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on the 31st March 2002 the Supplement to the Uniform Customs and Practice forDocumentary Credits for Electronic Presentations, thankfully shortened to eUCP,was born as the first step in responding to this need.
At the date of this article it is likely that the majority of students will have limited, ifany, ‘hands on’ experience of processing Documentary Credits subject to eUCP.Regardless of current levels of involvement, the advent of electronic presentationswill undoubtedly change the roles of practitioners and banks involved in the traditionalDocumentary Credit transactional flow.
Will beneficiaries need to receive credits in their favour via an Advising Bank or presentdocuments to a Nominated Bank?
Will a Confirming Bank need to receive Documentary presentations?
These are questions that are already being answered as trade chains are establishedto pioneer the evolution from a paper to an electronic medium.
For this reason Documentary Credit Specialists will need to familiarize themselveswith the content and structure of the 12 articles of eUCP together with therelationship between eUCP and UCP500.
In this respect the following points may be helpful to prospective CDCS candidates.eUCP is a supplement to, and must be used in conjunction with, UCP 500.It is flexible and may be used to facilitate mixed presentations made up of partpaper-based and part electronic presentations, or fully electronic presentations.It is intended to be dynamic. The current version 1.0 represents a starting pointfor future revisions that will be needed to keep pace with changes to technologyand practice.It is structured to align with UCP 500 and its rules follow a logical sequence ofactivities undertaken in an electronic presentation.It provides definitions of terminology used within its text.The provisions of its articles in relation to UCP 500 may be categorized intofour groupings. These are:– provisions of UCP500 that have no parallel in the eUCP and are applicable to
an eUCP Credit (UCP 500 articles 2 to 10 for example);– provisions of the eUCP that add to but do not contradict UCP 500 rules with
respect to an electronic record and which do not impact the UCP 500provisions with respect to paper documents (eUCP article e3(a) for example);
– provisions of the eUCP that differ from the treatment of paper documentsunder UCP 500 but only relate to an electronic record so that there is nochange to the provisions of UCP 500 as to paper documents under an eUCPCredit (eUCP articles 11 and 12 for example);
– provisions of the eUCP that change the UCP 500 rule where the Credit issubject to eUCP and that are applicable whether or not they apply to anelectronic record or a paper document presented under an eUCP Credit(eUCP articles e2(a), e5(c) and (e), e7(a) and (b), and e8 for example).
CDCS Signpost Article
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Credits issued subject to eUCP are automatically subject to UCP 500 withoutspecific reference.Under a Credit issued subject to eUCP its provisions prevail over those of UCP500 in the event of their application providing different results.
To further assist in the study of eUCP rules the ‘Guide to understanding the electronicsupplement to the UCP 500’, ICC publication no. 639 is recommended reading.
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Section 3
CDCS Examination Specifications
Multiple-choice Questions
The CDCS examination has a total of 120 questions and is in two parts:Part A contains 85 multiple-choice knowledge (KN) and application (AP) questionsbased on the Study Text – approximately 1.5 hours of the examination.Part B contains 35 questions: 5 are multiple-choice analysis (AN) questions and30 are included in the simulation exercises — approximately 1.5 hours of theexamination.
Content Outline Total KN AP AN
Part A
A. Documentary Credit Groups1. Types and Uses of Documentary
Credits 4 42. Parties to the Credit: Roles,
Responsibilities and Risks 10 5 53. Types of Payment 4 2 2
Subtotal 18 11 7 0B. Characteristics
1. Primary Characteristics 3 32. Specialty Characteristics 13 8 4 1
Subtotal 16 11 4 1
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Content Outline Total KN AP ANC. Operations
1. Processes 21 8 10 32. Related Products/Terms 4 3 1
Subtotal 25 11 11 3D. Financial and Commercial Documents 21 11 9 1E. Rules 10 7 3
Part BSimulation Questions 30
TOTALS 120 51 34 35
Candidates must pass the entire examination while achieving aminimum passing score on Part B of the examination
Candidates will have THREE hours to complete the examination.Candidates are responsible for timing themselves to ensure there is sufficienttime to complete both sections of the examination in three hours.The multiple-choice questions test your knowledge and how to apply thatknowledge to specific situations outlined in the simulation exercises.Each question qualifies for one point/mark; incorrect answers/points are notdeducted from the number of correct answers.The matrix on this page identifies the number of questions by cognitivelevel. See Section 9 for additional explanations on the three cognitive levelsfor multiple-choice questions.Types of questions – there are three basic levels of multiple-choice questions:– knowledge questions are recall questions;– application questions apply knowledge;– analysis questions require both knowledge and application skills.
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Section 4
Self-assessment Tool
1. This simple self-assessment tool will assist you in identifying the areas of theContent Outline that will require more study.
2. Plan to set aside adequate time to review each item on the Content Outlineand determine if the topic will require Review or Study.
Review indicates familiarity with the topic. You feel you understand andcan explain the concepts and ideas in the section.Study indicates you will require a more thorough study of the topic inorder to understand and explain the concepts and ideas in the section.
Review Study
Section A Documentary Credit Groups
1. Types and Uses of Documentary Credits
a. Commercial
b. Standby
2. Parties to the Credit: Roles, Responsibilities and Risks
a. Required Parties
(1) Issuing Bank
(2) Beneficiary
b. Applicant
c. Banks’ Roles and Obligations
(1) Issuing Bank
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Review Study
(2) Confirming Bank
(3) Advising Bank
(4) Negotiating Bank
(5) Paying Bank
(6) Accepting Bank
(7) Reimbursing Bank
a. Types of Risk
(1) Operational/UCP 500
(2) Credit
(3) Foreign Exchange
(4) Fraud
(5) Legal
(6) Political
2. Types of Payment
a. Sight
b. Deferred
c. Negotiation
d. Acceptance
Section B Characteristics of Documentary Credits
1. Primary Characteristics
a. Revocable
b. Irrevocable
2. Specialty Characteristics
a. Revolving
(1) Cumulative vs Non-cumulative
(2) Automatic vs Controlled
b. Instalment
c. Advance Payments
d. Transferable
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Review Study
e. Evergreen
f. Clean
g. Direct Pay
Section C Operations
1. Processes
(1) Issue
(2) Pre-advise
(3) Advise
(4) Confirm
(5) Amend
(6) Transfer
(7) Present
(8) Examine
(9) Pay/Reject
(10) Claim
(11) Reimburse Funds
(12) Cancel
2. Related Products/Terms
(1) Letter of Indemnity
(2) Air Way Release
(3) Steamship Guarantee
(4) Assignment of Proceeds
(5) Participation and Syndication
(6) Trade-related Incoterms
Section D Financial and Commercial Documents
1. Draft/Bill of Exchange
2. Commercial Invoice
3. Ocean/Marine/Port-to-port Bill of Lading
4. Non-negotiable Sea Waybill
Self-assessment tool
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Review Study
5. Charter Party Bill of Lading
6. Multi-modal Transport Document
7. Air Transport Document
8. Road, Rail or Inland Waterway Transport Document
7. Forwarder’s Cargo Receipt, Mate’s Receipt andConsolidator’s Receipt
8. Post Receipt or Certificate of Posting
9. Courier or Expedited Delivery Service Document
10. Insurance Document
11. Weight Certificate
12. Certificate of Origin
13. Packing Lists
14. Inspection Certificate
15. Other Documents
Section E Rules
1. UCP 500 – Uniform Customs and Practices forDocumentary Credits
2. ISP98 – International Standby Practices
3. URR 525 – Uniform Rules for Bank-to-bankReimbursements under Documentary Credits
4. UCP500 sub article 20(b) – Decision on OriginalDocuments
5. ICC Position Papers 1 – 4
6. ISBP – International Standard Banking Practicefor the Examination of Documents underDocumentary Credits
7. eUCP – Supplement to UCP500 for ElectronicPresentations
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Section 5
Key Terms
Key terms have been identified to assist you as you review the text. They are astarting point and you may find it helpful to develop your own glossary of terms.
Chapter 1AcceptanceAdvising BankApplicantBeneficiaryComplied withConfirming BankCountersDraftsIrrevocable undertakingIssuing BankNegotiationNominated BankPaymentStipulated documents
Chapter 2ArbitratorDeferred paymentDelivery obligationGood faithLegally enforceable
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Method of paymentPerformanceTrade terms
Chapter 3AmendmentAuthenticateDiscrepanciesFreely negotiableMiddlemanPartial drawingsPartial shipmentReimburseReinstatedRevocableSubstitutionTransferableTransferring Bank
Chapter 4ComplianceCorrespondent BankDisclaimerExpiry dateFacilityPresentation of documentsRespondWithout recourse
Chapter 5Down loadedOperational guidelinesWorkability
Chapter 6AgentCarrierCharter partyClean transport documentConsigneeConsignor
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Date of shipmentDocuments of titleEndorsedFreight forwarderFreight payableFreight prepaidFull setIndemnityIntended vesselLoading on BoardMarked as OriginalMasterMultimodalNegotiabilityNon-documentary conditionsNon-negotiableNotationOn DeckOn its FacePlace of deliveryPort of dischargePort of loadingReceived for shipmentRoll on Roll offShipper load and countTaking in chargeTranshipment
Chapter 7All risksAssigned by transfer or endorsementCertificatesDate of issuance of insurance documentDescription of goodsFixed and determinable future timeLicenseMinimum coverUnconditional order in writing
Chapter 8Assignment of proceedsCommon sense
Key terms
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Confirmation instructionsCredit riskDiscrepant documentsForce majeureFreely negotiableGood judgmentHonoring obligationsInconsistent with one anotherNotice of refusalPeriod for presentationReasonable careReasonable timeReimbursing BankRole of the checker
Chapter 9Bank to Bank ReimbursementsReimbursement amendmentsReimbursement authorizationReimbursement claimReimbursement instructionsReimbursement undertakings
Chapter 10ConversionCounter indemnitiesDelivery ordersGuaranteeLetter of IndemnitySyndication
Chapter 11Fraud riskLegal risksRisks for the applicantRisks to the beneficiaryRisks to the Advising BankRisks to the Issuing BankRisks to the Nominated BankSovereign and regulatory risks
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Section 6
Planning Your Study
Tips from successful certification examination candidates
Your objective should be to arrive at the examination secure in the knowledgethat, through a well planned course of study and your practical experience, youare in as strong a position as possible to be successful.Draft a study schedule/timeframe based on your objectives and a realistic viewof your time available for study and preparation.Review the CDCS Content Outline and Examination Specifications (Sections 2and 3) and identify the areas with which you are familiar and require review andthe areas that are new and will require in-depth study.Discuss your objectives and study plan with a colleague or mentor who is willingto discuss the examination materials with you and assist you during your studyphase.
Study Techniques
Using your experience, think about study techniques that have helped you in thepast and any others you may have come across. How do you learn something new onthe job?
Some ideas you may want to consider include:summarize the main ideas in the text;write study questions for self-testing based on materials in the text;use the key terms to identify not only definitions but use them for review;identify/flag key words, terms and concepts you do not understand or that arenew to you;
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prepare ‘flash cards’ to capture key terms, definitions, exhibits and other materialthat you have identified for additional study;work with a partner or study group to teach and test each other;test yourself frequently. What do I know? Do not spend time studying what youknow. Use what you know for review at the end of the study process;what is troublesome? Identify someone to help you understand sections you donot know and find difficult;use the resources available through CIB and IFSA: check the website(www.cdcs.org) for the CDCS Forum, a listing of review/revision courses andother examination-related information;note questions to ask others with more experience or members of your studygroup.
Develop a Study Plan
Once you have considered the different study options available to you, it is stillimportant to draft a study schedule/timeframe based on your objectives and a realisticview of your time for study and preparation. Your study plan should reflect yourindividual preferences and methods of working. It is important to remember that astudy plan is a flexible document and is both an indicator of where you are and whereyou want to be.
The first step you should take is to determine your personal study objectives basedon the Content Outline and Study Text.
You may find it helpful to write out your objectives and post them in a visiblelocation.Advance planning will provide multiple benefits as you prepare for the CDCSexamination. It will not require much time to develop a study plan, but doing sowill establish your priorities. The most important part of a study plan is to identifyhow, when and where you want to study.By reviewing the CDCS Content Outline and Examination Specifications (Sections2 and 3), you will be able to identify the areas with which you are familiar; thoseyou wish to review in detail, and those that are new to you and need in-depthstudy.You will now be in a position to develop an overall study plan with specifictimelines. In drawing up your plan, you may find the following useful:– prepare a study schedule – be realistic. Space your studying and allow ample
time for review;– keep a copy of the CDCS Content Outline in a prominent place as you will
refer to it often;– make the best of your environment. Some individuals prefer to study in a
quiet place, while others prefer working with the radio or television on in thebackground. Whatever your preference, you can usually create theenvironment you want for your study session;
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– be prepared to study in free moments, whenever you can. This meansidentifying times that are available to you for study, such as travel time, standingin lines and queues, waiting for a meeting to start, etc.
Summary
Relax while studying. The CDCS examination is an opportunity for you to learn andto demonstrate your knowledge and ability. Maintain a positive attitude that you willbe successful on the examination and will allocate the resources required to ensuresuccess.
Do not worry about how much time is left before the examination. You have plannedadequately to allow for the maximum use of your time.
Take breaks, exercise. Keep your body and mind relaxed.
A sample Study Plan is shown on the next page – you may wish to reproduce it toassist you in your preparation for the examination.
Planning your study
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Study plan
Content Outline Topic Page Reference Completed
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Section 7
Keys to Studying for Success
As adults we know that we learn in a variety of ways that differ significantly from theways we learned as children. As you read the Study Text you will be able to comparethe information with your own experience and knowledge. You can use the informationyou are studying in several ways:
if this is information you already know, the materials will reinforce yourknowledge;if the information is new to you, you can relate it to your own experience andconsider how the information can be used in your job;each chapter has objectives and study questions that will assist you as you focuson the key elements within a chapter;use your memory effectively:
– frequent recall and use: build regular reviews into your study sessions. Beselective about what you need to recall — use key terms and facts;
– indicate significance: make the information you need to recall stand out byemphasizing it; link the information to your experience; use mnemonics;
– link to other items: link information to your own experience; look for patternsand relationships among the items; compare and contrast information;
– regular review: plan regular review of key points; end a session by summarizingwhat you have studied;
getting started can be difficult: starting a session with a brief review of theprevious session may be helpful;if you are not feeling motivated, consider why you started this study in the firstplace and think about what the CDCS credential will enable you to do;build in rewards — at the end of study sessions; at the completion of apredetermined number of study sessions; and when you have completed yourstudy;
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it is important to think positively during your preparation period. If you do notfeel comfortable about your memory, monitor your progress. You will be pleasedat how much you can recall;there are no trick questions. As you take and study the sample test, you will seehow straightforward the questions are;the answers to all multiple-choice questions have been documented to the StudyText.
Successful students offer the following advice on planningyour study and preparation for the CDCS examination◆ To develop my study plan, I reviewed the syllabus and study materials. Then
I divided the Study Text and the study topics into the number of weeksbefore the exam, allowing time for review.
◆ Design your plan with short study sessions (about 45 minutes) on a regularbasis. This builds a study habit and makes it easier to stick to your plan.
◆ When planning your schedule or timetable of study, always build in extratime for contingencies, time off and relaxation and fun. There is nothingworse than feeling like a prisoner of the examination preparation process.If you build in extra study sessions, you can afford to be flexible and remainin control of your time.
◆ Plan to revise your study schedule as you go along.◆ Tell your family, friends and colleagues what you are doing. They will then
know what to expect of your schedule and be more supportive.◆ Take charge of your own studies. Spend time getting to know the structure
and layout of the materials. Monitor your study progress against your planand make adjustments as needed. Expect success — if you put the effortin, you will pass.
At the Examination Site1.Plan to arrive at least 30 minutes early, as identification will be checked prior to
your being allowed into the examination room.2.The examination will start promptly.3.You will be allowed a full three hours to take the examination.4.Read all instructions carefully.5.Pace yourself: the examination has been written to allow approximately 1 ½
hours for each part of the CDCS examination.
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Section 8
CDCS Study Groups
There is a great deal of benefit to studying with others. Conference calls, email andthe internet provide access to your colleagues preparing for the CDCS examination.Usually two types of information are shared in study groups:
topic information from the Study Text;informal study tips, support and general assistance.
There are several ways to form study groups; most candidates preparing for othercertification examinations prefer the following two:
Local Study Group: if there are others in your bank or city preparing for theexamination that is your first and probably best option;Electronic Study Group: identify others preparing for the examination who arewilling to share ideas, information and provide support by phone, fax and/oremail.
All questions on the examination are referenced to the Study Text; it is very importantto use the Study Text as the sole reference. It should be supplemented by the Rulesoutlined in Section E of the Content Outline.
Study Groups Tips1. Select the format that meets the schedules within your group:
Weekly usually meets for 1 – 1 ½ hours per sessionSemi-monthly usually meets twice a month for 3-hour sessionsMonthly usually meets for 3 or 4 hours per sessionTwo days often 4 – 6 hours per dayThree days often 4 – 6 hours per day
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2. Determine the number and length of sessions.3. Determine the topic schedule: number of sessions on topic material and
number of sessions focused on study tips etc.4. Determine how presentations will be made to the group:
will leadership rotate and each individual assume responsibility for certainsections of the Study Text, which they will prepare for the rest of thegroup?will you have experienced managers, supervisors or CDCSs from thebanks discuss the chapters in the Study Text?
5. Supplement the sessions with review of the Self-Study Guide.6. After individual or group review of a chapter, answer the questions at the
end of each chapter. They are not in the examination format but highlightthe important information in each chapter.
7. Prepare test questions for other members of the group.8. Prepare glossary cards based on the terms in the Study Guide and other key
terms identified from the Study Text.
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Section 9
Multiple-choice Question Formats
Levels of multiple-choice questions
Section A of the CDCS examination is entirely multiple-choice questions. There arethree levels of questions based on the cognitive or thinking levels required to correctlyanswer a question.
Knowledge (KN) questions are recall questions.Application (AP) questions apply knowledge.Analysis (AN), also called higher level thinking, questions require both knowledgeand application skills.
There are several standard formats for multiple-choice questions. Becoming familiarwith the various types will assist candidates as they prepare for the examination.
Sample Generic Questions
Correct answers are noted by an *
Recall/Knowledge: recall or knowledge questions recognize specific informationand facts that do not vary by situation. Such questions are predominantly an effort ofmemory and include the recall of specific facts, generalizations, concepts, theories,formulae and procedures. There will be 51 knowledge or recall questions on theexamination.
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Which of the following is a primary color?A. purpleB. green
* C. redD. orange
Application: application questions require comprehension, interpretation, ormanipulation of concepts or data. They primarily test simple interpretations orapplications of limited data. Questions may require recognition of more than oneelement or concept and the ability to apply knowledge to a specific situation. Therewill be a total of 34 application questions on the examination.
If the time in London, using Greenwich Mean Time, is 7.30 pm, what timewill it be in New York, using Eastern Standard Time (EST)?
A. 12:30 amB. 1:30 amC. 1:30 pm
* D. 2:30 pm
Analysis: analysis questions require the integration or synthesis of a variety of conceptsand/or elements to solve a specific problem situation. Questions test the ability togather information, evaluate data and make decisions. Analysis questions often requirevalue judgments concerning the effectiveness, appropriateness or best course of actionin a given situation. There will be five analysis questions on the examination.
If a flight taking off from London at 12:35 pm takes 6.5 hours to reach NewYork, what time will it land, using Eastern Standard Time (EST)?
A. 1:05 pm* B. 2:05 pm
C. 12:35 amD. 1:05 am
Direct or Closed Question: a complete question followed by four options; there isonly one correct answer to direct or closed questions.
Who was the King of England in 1484?A. George I
* B. Richard IIIC. Edward IVD. Henry V
Open Question or Incomplete Sentence: an incomplete sentence with fouroptions; there is only one correct answer to incomplete sentence questions.
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Confederate Commander General Robert E. Lee’s horse was namedA. TriggerB. Silver
* C. TravelerD. Champion
Complete Question that includes the phrase ‘which of the following’: usedwhen there is more than one correct answer to a question, but ONLY one of thecorrect answers is offered in the options.
Which of the following is a prime number?* A. 7
B. 10C. 12D. 15
Complex Multiple-choice: there may be more than one correct answer. Theresponse will include options.
Which of the following cities are capitals of their respective countries?1. Paris2. Washington DC3. Chicago4. SydneyA. 4 only
* B. l and 2 onlyC. l, 3 and 4 onlyD. 2, 3 and 4 only
Negatively Worded or EXCEPT questions: three of the four options are correctand only one option is incorrect. There is only one answer for EXCEPT questions.
All of the following are primary colors EXCEPT* A. orange
B. redC. blueD. green
Key Words — LEAST, BEST, MOST: the question requires evaluation and theselection of the appropriate option.
Most color blind males inherit the gene from theirA. father
* B. motherC. maternal grandmotherD. paternal grandfather
Multiple-choice question formats
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Situational Set: there is one answer to each question in situational sets. There maybe more than one question for each information set.
Michael has $100 to purchase clothes. Costs are: shirts, $20 each; sweaters$30 each; slacks $40 per pair; and socks $5 per pair.
1. If Michael purchased 1 pair of slacks and 1 sweater, how many shirts can hebuy with his remaining money?
* A. 1B. 2C. 3D. 4
2. If Michael spent 40% of his money on socks, how many pairs did he purchase?A. 4B. 5
* C. 8D. l0
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Section 10
Simulation Exercises
Section B of the examination consists of FIVE analysis questions and SIX simulationexercises. The simulations test the information gathering and decision-making skillsof the candidate by requiring them to analyze the information provided and identifythe irregularities/discrepancies in the documents for each simulation.
Each simulation exercise has five responses that equate to FIVE questions persimulation.Each simulation will include samples of documents to review.The content of each simulation is designed to reflect real work situations and tobe relevant to the responsibilities of Documentary Credit Specialists.There will be a series of documents that the candidate must review prior toanswering the questions for each simulation.
Candidates are required to identify the FIVE correct discrepancies or irregularitiesfrom a checklist of a possible 15.
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Section 11
Tips for Answering Multiple-choiceQuestions
In multiple-choice questions the answer follows the question. There are fouroptions and only one is correct. Your task is to identify the correct answer fromthe plausible, but incorrect, distracter answers. The correct answer is called thekey and the other options are called distracters.Remember that all multiple-choice questions have the same format — fouroptions but only one correct answer.The correct answer is the best answer for each question.Only correct answers are scored, so it is to your advantage to answer everyquestion.Analyze what the question is asking.Try to answer the question before looking at the options. Then decide whichoption is closest to your answer and is the best option.It is best to answer questions as you proceed through the test booklet.Place question marks in the margin of your test booklet to indicate questionsthat require more time or you cannot answer. You can return to these questionswhen you have completed the other questions.As you cannot bring extra paper into the examination room, it is helpful to writedirectly in your test booklet.Be careful of making pencil marks on the answer sheet. An Optical Mark Readermachine scores the answer sheet. It is very important to completely erase pencilmarkings if you change your mind. Do not make notes on the answer sheet.You can waste valuable time and increase the opportunity for error if you markyour answers on the answer sheet individually. A preferred method is to circleyour answer in the test booklet and transfer your answers in blocks to theanswer sheet. Test experts recommend transferring answers after completingeach page of questions.
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The more questions you answer, the better your chances of achieving a passingscore. For best results pace yourself, periodically checking your progress.If you are near the end of the examination period, make your best guess at theunanswered questions by eliminating the incorrect/wrong options. You could getthe answer correct.Read all instructions carefully.
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Section 12
Pre-examination Checklist
The admission ticket or attendance notice will be received two weeksprior to examination.
Select the best route to the test center and identify parking options.
Plan to arrive at the test center 30 minutes prior to the examinationstart.
Plan on three full hours to complete the examination after instructionsby the test center supervisor.
Bring your admission ticket and two forms of identification; one must bea picture ID.
Bring several HB/ #2 sharpened pencils; most test centers will not havepencil sharpeners.
Bring an eraser and watch as the test center may not have a clock.
Do not bring food, beverages, extra paper, books, supplies, etc into theexamination room.
Do not bring electronic devices into the examination room. You will bedisqualified if a pager or phone rings.
Become familiar with the answer sheet on pages 48-49.
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Section 13
Sample Answer Sheet
The sample answer sheet on the next pages is for illustrative purposes only: thespatial layout for the CDCS examination will be slightly different, eg to allow forthe incorporation of the ifs/International Financial Services Association logos.The instructions to candidates will be as follows:– use only HB/#2 pencil to complete this form;– make sure that you mark your choice with a straight line;– to amend an answer, THOROUGHLY erase and mark the appropriate box;– mark ONE box only for each question;– answer all 120 questions;
Registration No. – your candidate number as advised to you on your attendanceletter/notice.Session No. – as advised on your attendance letter/notice.
Recertification guidelines
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Section 14
Sample Test
Answers to the Sample Test are in Section 16 page 65
Part A – Multiple-choice Questions
1. Which of the following clauses or notations appearing on the face of theTransport Document would preclude it from being accepted?
A. Oil drums are leaking.B. Highly flammable material.C. Potentially explosive material.D. Refrigerated seafood, may spoil during voyage.
2. An Issuing Bank becomes bound by the terms of an amendment to aDocumentary Credit at the time at which the:
A. Beneficiary accepts the amendment whether expressly or by implication.B. Reimbursing Bank agrees to the Applicant’s request for an amendment.C. Advising Bank advises the amendment to the Beneficiary.D. Issuing Bank issues the amendment to the Advising Bank.
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3. When an Advising Bank adds its confirmation to a Documentary Credit,which of the following risks has the Beneficiary mitigated?
1. Issuing Bank.2. Foreign Exchange.3. Political.4. Fraud.
A. 1 and 3 only.B. 1 and 4 only.C. 2 and 3 only.D. 2 and 4 only.
4. A Beneficiary receives an Irrevocable Documentary Credit for which USD22,500 may be drawn during each month of the Documentary Credit’s one-year validity. The Documentary Credit also indicates that reinstatement ison a cumulative basis. Full monthly drawings were made during the first,second, fourth, fifth and seventh months and there have been no otherdrawings. In the last month of the Documentary Credit’s validity, theBeneficiary expects to make a final shipment. What is the maximum valueavailable for this final drawing?
A. USD 112,500B. USD 135,000C. USD 157,500D. USD 180,000
5. Which of the following Incoterms is correctly described?
Incoterm Insurance Doc. Transport Doc.
A. DDP Required marked Freight Paid.B. CFR Required marked Freight Collect.C. FOB Not required marked Freight Paid.D. FCA Not required marked Freight Collect.
6. Prior to advising a Documentary Credit to the Beneficiary, the Advising Bankis responsible for:
A. effecting payment against conforming documents.B. checking the apparent authenticity of the Documentary Credit.C. notifying the Issuing Bank that the Documentary Credit is being advised.D. checking that the reimbursement method is effective?
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7. A Documentary Credit states that shipment must be made on or about 27June. Which of the following shipment dates would be acceptable?
1. 20 June2. 27 June3. 02 July4. 03 July
A. 1 and 2 only.B. 1 and 4 only.C. 2 and 3 only.D. 3 and 4 only.
8. If an Exporter is willing to release the shipping documents directly to theBuyer, but wishes to retain some guarantee of payment should the Buyer failto pay on the due date, which of the following Documentary Credits BESTsuits the Exporter’s needs?
A. Transferable.B. Revolving.C. Standby.D. Evergreen.
9. Where a Documentary Credit includes a shipping schedule and an instalmentis NOT shipped within the stipulated period, which of the followingstatements concerning the Documentary Credit is correct?
A. It continues to be available for that instalment only.B. It continues to be available for that and other instalments.C. It ceases to be available for that instalment only.D. It ceases to be available for that and other instalments.
10. A Marine Bill of Lading acts as:
1. an acknowledgement of receipt of the goods by the carrier.2. evidence of a contract of carriage.3. a document of title for the goods.4. evidence of the contract between the seller and the forwarding agent?
A. 1 and 3 only.B. 2 and 4 only.C. 1, 2 and 3 only.D. 2, 3 and 4 only.
11. Which Documentary Credit enables a Beneficiary to obtain pre-shipmentfinancing without impacting his facility?
A. Transferable.B. Red Clause.C. Irrevocable, payable at sight.D. Confirmed Irrevocable, payable at maturity.
Sample test
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12. Which of the following percentages represents the minimum insured valueof goods on the insurance document unless otherwise stated in theDocumentary Credit where the CIF/CIP value can be determined?
A. 100%.B. 105%.C. 110%.D. 115%.
13. Documents are presented in accordance with the terms of an UnconfirmedDocumentary Credit payable at sight and the Nominated Bank chooses tonegotiate them. Which of the following statements best describes theNominated Bank’s actions?
1. Make immediate payment to the Beneficiary.2. Effect payment on receipt of covering funds.3. Present documents to the Issuing Bank.4. Confirm sight to the Reimbursing Bank.
A. 1 and 3 only.B. 1 and 4 only.C. 2 and 3 only.D. 2 and 4 only.
14. A Documentary Credit is received without a stipulation of whether partialshipments are allowed. Which of the following statements is applicable?
A. They are allowed.B. Refer to the Issuing Bank.C. Refer to the Beneficiary.D. They are prohibited.
15. When a bank confirms an Irrevocable Transferable Documentary Credit itassumes the credit risk of which party?
A. The Applicant.B. The Issuing Bank.C. The First Beneficiary.D. The Second Beneficiary
16. When an Advising Bank has accepted a Time/Usance Draft under an AdvisedDocumentary Credit, they are responsible for effecting payment at maturitywhen:
A. they have received funds from the Issuing Bank.B. they have received funds from the Reimbursing Bank.C. the draft is verified by the Applicant.D. the draft is presented by the Beneficiary.
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17. Delivery of goods has been made to the buyer on 08 October. The relevantdocuments were presented in order, including a CMR dated 15 days prior todelivery. The Documentary Credit terms state that payment is to be effected30 days after shipment. On which date will payment be made? (There areNO bank holidays and Saturdays and Sundays are NOT banking days.)
A. Friday 22 October.B. Monday 25 October.C. Friday 05 November.D. Monday 08 November.
18. The Confirming Bank receives documents on Friday 02 April and finds themto be in order on 05 April. Tenor is 30 days after the Bill of Lading date. TheBill of Lading is dated 01 April, and the Confirming Bank agrees to pay theBeneficiary immediately. On what date would the Confirming Bank expectto receive funds from the Issuing Bank? (There are NO bank holidays andSaturdays and Sundays are NOT banking days.)
A. 05 April.B. 12 April.C. 30 April.D. 03 May.
19. If an Applicant requests that the Documentary Credit expires for presentationat the Issuing Bank with drafts drawn on the Issuing Bank 90 days aftersight, how should the Documentary Credit be made available?
A. By sight payment.B. By deferred payment.C. By acceptance.D. By negotiation.
20. A Documentary Credit that will become available for presentation of shippingdocuments to the Issuing Bank only after it has received and approved aperformance guarantee is usually described as:
A. Standby.B. Revocable.C. Inoperative.D. Advance Payment.
21. In accordance with UCP, what is the maximum number of banking days(inclusive of presentation date) that a Confirming Bank is allowed to refusethe documents?
A. One.B. Three.C. Seven.D. Eight.
Sample test
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22. What should an Advising Bank do if it receives a Documentary Credit fromthe Issuing Bank which includes the term ‘Transmissible’?
A. Disregard the term.B. Seek clarification.C. Advise the Documentary Credit as transferable.D. Refuse to advise the Documentary Credit.
23. A Documentary Credit calls for presentation of an Insurance Certificate.Which of the following insurance documents would be acceptable for CIFshipment where the invoice value is USD 75,000?
1. Insurance Certificate for USD 82,500.2. Insurance Policy for USD 85,000.3. Insurance Declaration under Open Cover for USD 75,000.4. Insurance Certificate for USD 75,000.
A. 1 and 2 only.B. 1 and 4 only.C. 2 and 3 only.D. 3 and 4 only.
24. In accordance with UCP all the following statements relating to commercialinvoices under a non-transferable Documentary Credit are correct EXCEPTthe commercial invoices must:
A. be manually signed by the Beneficiary.B. be made out in the name of the Applicant.C. appear to have been issued by the named Beneficiary.D. indicate the description of goods corresponding with the Documentary
Credit.
25. An Issuing Bank has issued a sight Documentary Credit to a Beneficiaryauthorizing a Nominated Bank to pay the Beneficiary for all documentspresented in accordance with the Documentary Credit terms and conditions.Upon receipt of complying documents drawn under the Documentary Creditdirect from the Beneficiary, the Issuing Bank should:
A. examine the documents and pay the Beneficiary.B. verify the documents and pay the Nominated Bank.C. return the documents to the Beneficiary for presentation to the
Nominated Bank.D. remit the documents to the Nominated Bank for examination.
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26. Which party has the MOST responsibility to examine the terms and conditionsof a Documentary Credit against the sales agreement?
A. Applicant.B. Beneficiary.C. Issuing Bank.D. Confirming Bank.
27. Which of the following classification types BEST describes a Standby Creditthat is intended to be the primary means of payment?
A. Bid bond.B. Direct pay.C. Performance.D. Advance payment.
28. In the case of a Non-cumulative Revolving Documentary Credit available forUSD 10,000 per month and valid for six months, which of the followingstatements is correct?
1. The face value of the credit is USD 10,000.2. The face value of the credit is USD 60,000.3. The amount(s) not utilized in one month may be carried over to the
next.4. The total undertaking of the Issuing Bank is USD 60,000.
A. 1 and 3 only.B. 1 and 4 only.C. 2 and 3 only.D. 2 and 4 only.
29. A Confirming Bank examines documents under a Documentary Credit, whichrequires presentation of an Invoice, Certificate of Origin and an Ocean Billof Lading. The Documentary Credit also includes the following clause:
‘Special condition – all packages must be clearly marked with the countryof origin.’
Where the documents do NOT show that the packages have been markedin this way and are otherwise in order, the Confirming Bank should:
A. reject the documents and suggest to the Beneficiary that he present acertificate evidencing that this condition has been complied with.
B. reject the documents and suggest to the Beneficiary that the Certificateof Origin be amended to include the special condition.
C. contact the Issuing Bank and withhold payment until clarification isreceived.
D. ignore the special condition and honour the Beneficiary’s presentation ofdocuments.
Sample test
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30. Documents under a Documentary Credit are tendered at the counters ofthe Confirming Bank and are mistakenly found to comply with its terms andconditions. The Confirming Bank pays the Beneficiary and forwards thedocuments to the Issuing Bank. Upon receipt by the Issuing Bank, thedocuments are checked and found to be discrepant. The Issuing Bank notifiesthe Confirming Bank of all discrepancies ten banking days after receipt andrefuses to reimburse. In considering whether the Confirming Bank can recoverfunds paid, which of the following statements are correct? It:
1. can recover from the Beneficiary.2. cannot recover from the Beneficiary.3. can recover from the Issuing Bank.4. cannot recover from the Issuing Bank.
A. 1 and 3 only.B. 1 and 4 only.C. 2 and 3 only.D. 2 and 4 only.
31. An Exporter based in New York has agreed to sell goods to a company inLondon. The Importer is responsible for arranging freight and insurance.Which of the following shipping terms is correct?
A. CIF London.B. FAS London.C. CIF New York.D. FAS New York.
32. What is the applicable Incoterm for an Airway Bill marked ‘Freight Prepaid’?
A. FCA.B. CFR.C. CPT.D. DAF.
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Part B – Simulation
INSTRUCTIONS
You are the Letter of Credit issuer at ABC Bank plc and are requested to identifyfive irregularities in the application form attached.
INFORMATION
Application for Documentary Letter of Credit
Applicant: Savage Steel plcIssuing Bank: ABC Bank PlcAmount: USD 120,00.00
Savage Steel Facilities with ABC Bank plcUSD 1,600,000
Current ExposureUSD 1,104,000
SUPPORTING DOCUMENTATION
1) Irregularity checklist.2) Irrevocable Documentary Credit Application Form.
INSTRUCTIONS TO STUDENTS
Identify the five irregularities on the attached irregularity checklist (document 1)then transfer your answer to the main answer sheet.
Sample test
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Irrevocable Documentary Credit Application Form
Applicant:Savage Steel plcTilton RoadBirminghamEngland
Date of Application: 1 March XX
Issue by (air) Mailwith brief advice by teletransmission(see UCP 500 Article 11)Issue by teletransmission (see UCP500 Article 11)Transferable Credit – As per UCP 500Article 48
Confirmation of the Credit:not requested requestedauthorized if requested by Beneficiary
Partial shipmentsallowed not allowed
Transhipmentsallowed not allowed
Please refer to UCP 500 transport Articlesfor exceptions to this condition
Insurance will be covered by us
Shipment as defined in UCP 500 Article46From: Newark, New Jersey
For transportation to: Southampton,EnglandNot later than: 15 May XX
Goods (Brief description withoutexcessive details – See UCP 500Article 5):Flat rolled steel as perpreviousLetter of Credit ref DC 731264Dated 10 January XX
Issuing Bank:ABC Bank plcLondonEngland
Expiry Date and Place for Presentation ofdocumentsExpiry Date: 31.5.XXPlace for Presentation: Pittsburgh
Beneficiary:Kirovski Steel SuppliesPittsburghPennsylvania USA
Amount in figures and words (Please useISO Currency Codes):USD 120,000Dollars one hundred and twentythousand
Credit available with Nominated Bank:Second Pennsylvannia Bank,Pittsburgh
by payment at sightby deferred payment at:by acceptance of drafts at:by negotiation
Against the documents detailed herein:and Beneficiary’s drafts(s) drawn on:
ABC Bank, London
¦ Terms:¦ FAS CIF¦ FOB Other terms:¦ CFR as per INCOTERMS
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Sample test
Irrevocable Documentary Credit Application Form (continued)
Commercial 1 signed, original 4 copiesInvoice and
Transport Document:Multimodal Transport Documents, covering at least two different modes oftransport (full set)Marine/Ocean Bill of Lading covering a port-to-port shipmentNon-negotiable Sea Waybill covering a port-to-port shipmentAir Waybill, original for the consignorOther transport documentto the order of: Kirovski Steel Supplies, Pittsburgh, Pennsylvania,USAendorsed in blankmarked freight prepaid payable at destinationnotify: Savage Steel plc, Tilton Road, Birmingham, England
Insurance Document:Policy Certificate Declaration under an open cover.
Covering the following risks:All Risks excluding surfacerust
Certificates:Origin USAInspection Issued and signed by qualified officialHealthOther
Other Documents:Packing List Goods description must exactly match Letters of CredittermsWeight List Two copies
Documents 2 days after the date but within the validity of the Credit.presented within 1 of shipment
Additional Instructions:One original transport documentto be sent direct to:Savage Steel plcTilton RoadBirminghamEngland
We request you to issue on our behalf andfor our account your Irrevocable Credit inaccordance with the above instructions(marked (x) where appropriate). ThisCredit will be subject to the UniformCustoms and Practice for DocumentaryCredits (1993) Revision Publication No.500 of the International Chamber ofCommerce, Paris, France), Insofar as theyare applicable.
R SAVAGEName and signature of the Applicant
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Irregularity Checklist
1. Applicant’s facilities with Issuing Bank would be exceeded ifDocumentary Credit issued. ❒
2. Description of goods unacceptable. ❒3. Inappropriate insurance specification. ❒4. Latest shipment date/expiry date incompatible with
presentation period. ❒5. Pricing of goods does not match value of the credit. ❒6. Request for validation of document(s) unacceptable. ❒7. Incorrect type of transport document requested ❒8. Additional instructions incompatible. ❒9. Shipping terms incompatible with transport document. ❒10. Issuer of some document(s) is ambiguous. ❒11. Draft drawee unacceptable. ❒12. Non-documentary condition(s) stipulated. ❒13. Inconsistent insurance requirement. ❒14. Country of origin not specified. ❒15. Confirmation instructions ambiguous ❒
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Sample test
Section 15
Scoring the Examination
The decision to use the objective testing methodology of a multiple-choice examinationas the assessment instrument for the Certified Documentary Credit Specialist (CDCS)credential allows a range of established statistical methods to be employed to supportthe testing and grading processes.
An objective test such as the CDCS examination can be defined as a ‘test constructedin such a way that every question has a single unique correct answer’. Multiple-choice tests are one form of an objective test and the opportunity to easily collectperformance data for multiple-choice examinations has led to the development ofnumerous techniques for test evaluation and monitoring.
A variety of tried and tested techniques will be applied to the CDCS examination.All questions are reviewed extensively through a peer review process.All questions are analyzed prior to use by an established panel of internationalexperts.Post examination analysis of individual question performance through the analysisof parameters, such as facility indices (which measure the difficulty of eachquestion) and discrimination indices (which measure the ability of the questionto distinguish between strong and weak candidates). This feedback providesinformation for use in the development of future examination questions and willalso be useful in identifying possible areas for increased learning support.In addition, each test as a whole will also be reviewed in terms of reliabilitymeasures, etc, to ensure that the examination is consistent and valid over time.
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Recertification guidelines
Section 16
Answers to Sample Test
Multiple-choiceQuestion Number Correct Answer
1 A2 D3 A4 C5 D6 B7 C8 C9 D10 C11 B12 C13 A14 A15 B16 D17 B18 D19 C20 C21 D22 A
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Question Number Correct Answer23 A24 A25 A26 B27 B28 B29 D30 C31 D32 C26 B27 B28 B29 C30 D31 C32 D33 C34 D
Simulation Irregularities2 4 8 10 13
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Section 17
CDCS Website
The CDCS website is available for your use and is a helpful tool as you preparefor the CDCS examination – www.cdcs.org.For additional information or if you do not receive your materials, visit eitherthe ifs or IFSA website or contact ifs or IFSA directly:
Institute of Financial ServicesIFS House, 4-9 Burgate Lane
Canterbury, Kent, CT1 2XJ, United Kingdomhttp://www.ifslearning.com
The International Financial Services Association9 Sylvan Way, First Floor
Parsippany NJ 07054 USAhttp://www.intbanking.org
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