H & Q Importers arranged to have a French winery ship a large quantity of fine wine to the United States. By signing a(n) ______________ H & Q authorized its bank to make full payment to the French winery if and when the wine arrives at the H & Q warehouse in Boston

Question

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A letter of credit is a financial document issued by a bank, upon the request of an importer, that guarantees payment to a seller for goods or services, provided that certain conditions are met. In this case, H & Q is the importer and the French winery is the seller. By signing a letter of credit, H & Q is authorizing its bank to make full payment to the winery if and when the wine arrives at the H & Q warehouse in Boston, thus ensuring that both parties are protected in the transaction. A certificate of deposit, trade agreement, and banker's acceptance are not relevant in this scenario.

H & Q Importers Arranged to Have a French Winery