Which of the following states that the bank will pay a specified sum of money to a beneficiary on presentation of particular,specified documents?
A)A draft
B)A bill of lading
C)A letter of credit
D)A promissory note

Question

Quizplus · Accepted Answer

A letter of credit is a document issued by a bank guaranteeing payment to a vendor (beneficiary) on behalf of a buyer (applicant) for certain goods or services, provided that the beneficiary submits the required documents according to the terms of the letter of credit. This arrangement reduces the risk for both parties, as the beneficiary can be sure of payment if they follow the stipulated terms, while the buyer can be confident that the vendor will provide the goods or services as specified.

Which of the Following States That the Bank Will Pay