When a letter of credit is used in exporting arrangements
A)no cash deposit or collateral is required from the importer.
B)the exporter pays the bank a fee for the service.
C)the letter of credit becomes a financial contract between the bank and the exporter.
D)the importer directly pays the exporter upon delivery of goods.

Question

Quizplus · Accepted Answer

The letter of credit states that the bank will pay the U.S.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.

When a Letter of Credit Is Used in Exporting Arrangements