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

Letter of Hypothecation

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Letter of Credit

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Bill of Lading

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Bill of Exchange

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Solution

The correct option is B Letter of Credit
Letter of Credit is an instrument issued by bank after request made by a foreign buyer that payment will be made to the exporter i.e. the beneficiary. It is useful where buyers and sellers do not know each other personally and are separated by distance. Hence, the document containing the guarantee of a bank to honour drafts drawn on it by an exporter is called as Letter of Credit.

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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

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

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

It is guaranteed, that the letter issued by the import's bank stating that it will honour the report bills to the bank of the exporter on to a certain account. Identity the document.

Q. Kinds of Negotiable Instruments
A bill of exchange is called as a/an ______ when bill of exchange drawn by one bank on another bank, or by itself on its own branch.

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