The major source of risk exposure resulting from issuance of standby letters of credit is:

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Credit risk is the major source of risk exposure resulting from the issuance of standby letters of credit. Standby letters of credit are guarantees that a bank will make payment to a beneficiary if the account party fails to fulfill its obligation. The bank's risk is that the account party will not be able to repay the loan, and the bank will be forced to make payment to the beneficiary.

The Major Source of Risk Exposure Resulting from Issuance of Standby