When a bank agrees to cover the current obligation of a third party if the third party fails to do so, this is called a:

Name: When a bank agrees to cover the current obligation of a third party if the third party fails to do so, this is called a:
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A financial guarantee is a commitment by a bank or another entity to cover a debt obligation of a third party in case the third party fails to fulfill it. This ensures the lender that the debt will be repaid.

When a Bank Agrees to Cover the Current Obligation of a Third