A ________ is an agreement between an exporter's bank and the foreign buyer's bank that guarantees payment to the exporter for a specific shipment of goods.

Question

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A letter of credit is a written commitment from a bank to pay the exporter, provided that the terms and conditions specified in the letter of credit have been met. The letter of credit acts as a guarantee that the exporter will receive payment for the goods shipped, even if the buyer fails to make the payment. It is a commonly used tool in international trade to mitigate the risk of non-payment by the buyer. Choices A, C, and D are not relevant to a letter of credit.

A ________ Is an Agreement Between an Exporter's Bank and the Foreign