What is the purpose of a letter of credit?
A) It states that the bank will pay a specified sum of money to a beneficiary on presentation of particular, specified documents.
B) It is a document written by an exporter instructing an importer to pay a specified amount of money at a specified time.
C) It serves as a receipt, a contract, and a document of title.
D) It indicates that the carrier has received the merchandise described on the face of the document.
E) It allows buyers to obtain possession of merchandise without signing a formal document acknowledging his or her obligation to pay.

Question

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A letter of credit is a financial instrument issued by a bank guaranteeing payment to a seller upon presentation of specified documents, ensuring the seller receives payment as long as the terms are met.

What Is the Purpose of a Letter of Credit