Ask Question
2 November, 00:37

A letter of credit:

a. Ensures a company that funds will be available when needed

b. Is analogous to a credit card that companies can draw on as needed

c. Is a representation that a company has a high credit rating

d. Provides a guarantee of payment from the buyer, reducing the credit risk to the seller

+1
Answers (1)
  1. 2 November, 02:25
    0
    d. Provides a guarantee of payment from the buyer, reducing the credit risk to the seller

    Explanation:

    A letter of credit is a document that guarantees a seller of payment from the buyer. It is drafted and issued by a bank assuring the seller of timely and full payment. A letter of credit is applied mostly in international trade where the buyer and seller hardly meet or know each other.

    Banks issue a letter a credit against cash or other securities. Should the buyers fail to make payment, a letter of credit assures the seller that the bank will take responsibility for the payment. Banks usually charge a fee for issuing letters of credit.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “A letter of credit: a. Ensures a company that funds will be available when needed b. Is analogous to a credit card that companies can draw ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers