Neptune Corp. is exporting for the first time to Australia and has contracted with Pinkerton Imports in Melbourne for an initial order valued at $110,000. Neptune Corp. wants Pinkerton Imports to secure a document from a Melbourne bank that indicates the bank will pay Neptune Corp. $110,000 upon presentation of specified documents by the exporter. What document is Neptune Corp. asking for?
A) bill of lading
B) time draft
C) letter of credit
D) sight draft
E) bill of exchange

Question

Quizplus · Accepted Answer

A letter of credit is a document issued by a bank guaranteeing that a seller will receive payment from the buyer upon presentation of specified documents. Neptune Corp. is asking Pinkerton Imports to secure this document to ensure payment for their export.