[GTC] Global Trade Certificate GTC Certification
Exam Guide
**Question 1.** Which settlement method involves the exporter shipping goods before
receiving any payment, relying on the importer’s promise to pay at a later date?
A) Prepayment
B) Open account
C) Documentary collection
D) Letter of credit
Answer: B
Explanation: Open account is a trade term where the exporter ships goods and the importer
pays after receipt, typically within a set credit period.
**Question 2.** In the context of trade finance, which risk is most directly associated with
sudden changes in exchange rates affecting the value of a transaction?
A) Commercial risk
B) Political risk
C) Currency risk
D) Legal risk
Answer: C
Explanation: Currency risk arises when fluctuations in foreign exchange rates alter the
transaction’s value for either party.
**Question 3.** Under UCP 600, which document is considered the “primary” evidence of
shipment in an export credit?
A) Commercial invoice
B) Bill of lading
C) Insurance certificate
D) Packing list
Answer: B
,[GTC] Global Trade Certificate GTC Certification
Exam Guide
Explanation: The bill of lading serves as the primary transport document proving that goods
have been shipped.
**Question 4.** Which type of Letter of Credit cannot be amended or cancelled without the
consent of all parties once it has been issued?
A) Revocable LC
B) Irrevocable LC
C) Confirmed LC
D) Transferable LC
Answer: B
Explanation: An irrevocable LC remains binding on the issuing bank and cannot be changed
without agreement from all involved parties.
**Question 5.** A “transferable” Letter of Credit allows the beneficiary to:
A) Transfer the credit to a third party without the bank’s consent.
B) Transfer the credit only with the issuing bank’s approval.
C) Transfer the credit to multiple parties simultaneously.
D) Transfer the credit only for partial amounts.
Answer: B
Explanation: Transferable LCs require the issuing bank’s consent before the beneficiary can
transfer the credit to another party.
**Question 6.** Which of the following documents is NOT typically examined by a bank under
the “document examination” process for an LC?
A) Certificate of origin
B) Shipping manifest
C) Export license
,[GTC] Global Trade Certificate GTC Certification
Exam Guide
D) Supplier’s internal audit report
Answer: D
Explanation: Banks focus on trade documents directly related to shipment and payment;
internal audit reports are irrelevant to LC compliance.
**Question 7.** Under URDG 758, a “demand guarantee” is characterized by:
A) Requiring proof of default before payment.
B) Being payable on demand without need for proof of loss.
C) Having a fixed expiry date after which it cannot be drawn.
D) Being limited to a specific project only.
Answer: B
Explanation: Demand guarantees are payable upon the beneficiary’s demand, without the need
to prove a default.
**Question 8.** Which guarantee type is primarily used to assure the performance of a
contractor in a construction project?
A) Bid bond
B) Advance payment guarantee
C) Performance bond
D) Warranty guarantee
Answer: C
Explanation: A performance bond guarantees that the contractor will fulfill contractual
obligations, protecting the project owner.
**Question 9.** In a “direct guarantee,” the guarantor’s obligation is:
A) Secondary to the principal debtor’s liability.
, [GTC] Global Trade Certificate GTC Certification
Exam Guide
B) Independent and primary; the guarantor pays upon demand.
C) Conditional upon the creditor’s acceptance of the guarantee.
D) Limited to a specific portion of the debt.
Answer: B
Explanation: Direct guarantees create an immediate, primary liability for the guarantor, payable
upon the beneficiary’s demand.
**Question 10.** The term “expiry event” in a guarantee refers to:
A) The date when the guarantee automatically terminates.
B) A specific condition that triggers the guarantee’s termination.
C) The moment the guarantor receives a demand for payment.
D) The period after which the guarantee can be renewed.
Answer: B
Explanation: An expiry event is a predefined condition (e.g., delivery of goods) that ends the
guarantee’s effectiveness.
**Question 11.** Under URC 522, a “Documents Against Acceptance” (D/A) transaction
requires the importer to:
A) Pay immediately upon presentation of documents.
B) Accept a time draft before receiving documents.
C) Provide a guarantee before documents are released.
D) Sign a standby letter of credit.
Answer: B
Explanation: In a D/A, the importer signs a time draft (acceptance) and receives the documents,
promising payment at a later date.
Exam Guide
**Question 1.** Which settlement method involves the exporter shipping goods before
receiving any payment, relying on the importer’s promise to pay at a later date?
A) Prepayment
B) Open account
C) Documentary collection
D) Letter of credit
Answer: B
Explanation: Open account is a trade term where the exporter ships goods and the importer
pays after receipt, typically within a set credit period.
**Question 2.** In the context of trade finance, which risk is most directly associated with
sudden changes in exchange rates affecting the value of a transaction?
A) Commercial risk
B) Political risk
C) Currency risk
D) Legal risk
Answer: C
Explanation: Currency risk arises when fluctuations in foreign exchange rates alter the
transaction’s value for either party.
**Question 3.** Under UCP 600, which document is considered the “primary” evidence of
shipment in an export credit?
A) Commercial invoice
B) Bill of lading
C) Insurance certificate
D) Packing list
Answer: B
,[GTC] Global Trade Certificate GTC Certification
Exam Guide
Explanation: The bill of lading serves as the primary transport document proving that goods
have been shipped.
**Question 4.** Which type of Letter of Credit cannot be amended or cancelled without the
consent of all parties once it has been issued?
A) Revocable LC
B) Irrevocable LC
C) Confirmed LC
D) Transferable LC
Answer: B
Explanation: An irrevocable LC remains binding on the issuing bank and cannot be changed
without agreement from all involved parties.
**Question 5.** A “transferable” Letter of Credit allows the beneficiary to:
A) Transfer the credit to a third party without the bank’s consent.
B) Transfer the credit only with the issuing bank’s approval.
C) Transfer the credit to multiple parties simultaneously.
D) Transfer the credit only for partial amounts.
Answer: B
Explanation: Transferable LCs require the issuing bank’s consent before the beneficiary can
transfer the credit to another party.
**Question 6.** Which of the following documents is NOT typically examined by a bank under
the “document examination” process for an LC?
A) Certificate of origin
B) Shipping manifest
C) Export license
,[GTC] Global Trade Certificate GTC Certification
Exam Guide
D) Supplier’s internal audit report
Answer: D
Explanation: Banks focus on trade documents directly related to shipment and payment;
internal audit reports are irrelevant to LC compliance.
**Question 7.** Under URDG 758, a “demand guarantee” is characterized by:
A) Requiring proof of default before payment.
B) Being payable on demand without need for proof of loss.
C) Having a fixed expiry date after which it cannot be drawn.
D) Being limited to a specific project only.
Answer: B
Explanation: Demand guarantees are payable upon the beneficiary’s demand, without the need
to prove a default.
**Question 8.** Which guarantee type is primarily used to assure the performance of a
contractor in a construction project?
A) Bid bond
B) Advance payment guarantee
C) Performance bond
D) Warranty guarantee
Answer: C
Explanation: A performance bond guarantees that the contractor will fulfill contractual
obligations, protecting the project owner.
**Question 9.** In a “direct guarantee,” the guarantor’s obligation is:
A) Secondary to the principal debtor’s liability.
, [GTC] Global Trade Certificate GTC Certification
Exam Guide
B) Independent and primary; the guarantor pays upon demand.
C) Conditional upon the creditor’s acceptance of the guarantee.
D) Limited to a specific portion of the debt.
Answer: B
Explanation: Direct guarantees create an immediate, primary liability for the guarantor, payable
upon the beneficiary’s demand.
**Question 10.** The term “expiry event” in a guarantee refers to:
A) The date when the guarantee automatically terminates.
B) A specific condition that triggers the guarantee’s termination.
C) The moment the guarantor receives a demand for payment.
D) The period after which the guarantee can be renewed.
Answer: B
Explanation: An expiry event is a predefined condition (e.g., delivery of goods) that ends the
guarantee’s effectiveness.
**Question 11.** Under URC 522, a “Documents Against Acceptance” (D/A) transaction
requires the importer to:
A) Pay immediately upon presentation of documents.
B) Accept a time draft before receiving documents.
C) Provide a guarantee before documents are released.
D) Sign a standby letter of credit.
Answer: B
Explanation: In a D/A, the importer signs a time draft (acceptance) and receives the documents,
promising payment at a later date.
