A letter of credit refers to ________________________.

A letter sent by importer to exporter sanctioning credit deal

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A letter sent by exporter to importer sanctioning credit deal

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A letter containing condition of credit purchase

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A bank agreeing to accept and pay on due date.

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Solution

The correct option is D A bank agreeing to accept and pay on due date.
A letter of credit refers to a bank agreeing to accept and pay on due date. A letter of credit is issued on behalf of an importer. A letter of credit can be defined as a written commitment to pay the seller if the importer fails to make the payment to seller or exporter on time.

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Similar questions

The document containing the guarantee of a bank to honour drafts drawn on it by an exporter is

(a) Letter of hypothetication

(b) Letter of credit

(d) Bill of exchange

What is a letter of credit ? Why does an exporter need this document?

Once a confirmed order and also a letter of credit have been received, the exporter approached his banker for ___.

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