Which of the following is true of a letter of credit in international trade?
A)No cash deposit or collateral is required from the importer.
B)The exporter pays the trusted third party (usually a bank) a fee for the service.
C)It becomes a financial contract between the trusted third party (usually a bank) and the exporter.
D)It is issued by the exporter at the request of the importer.
E)The creditworthiness of the importer is irrelevant when issuing a letter of credit.

Question

Quizplus · Accepted Answer

The letter of credit states that the bank will pay the exporter for the merchandise as long as it is shipped in accordance with specified instructions and conditions. At this point, the letter of credit becomes a financial contract between the bank and the exporter.

Which of the Following Is True of a Letter of Credit