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What Is a Letter of Credit

Question 101

Multiple Choice

What is a letter of credit?


A) A letter of credit provides parties with a way to pay for a sale or lease transaction under the UCC.
B) A letter of credit is required for any transaction under Revised Articles 2 and 2A.
C) A letter of credit promotes international trade and provides sellers with a guaranteed payment by a bank if the buyer fails to pay.
D) A letter of credit is an assurance by a bank, that the buyer has the ability to pay for a sale or lease transaction.
E) A letter of credit documents the buyer's credit history, so that the seller can determine whether to sell to the buyer on credit or require cash payment.

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