1.

Which of the following is NOT true regarding Letter of Credit?1). It is usually preferred when there is a high level of risk involved2). There are two types of LoC: Revocable and Irrevocable3). LoC are chargeable by bank4). It can be issued by only banks

Answer»

A Letter of CREDIT is a written commitment ISSUED by the bank or some other financial institutions for payment assurance to the seller party from the buyer’s REQUEST. This is a FACILITY provided by the bank for which it charges fees from the beneficiary. LoC is used when there is a high level of risk involves a business TRANSACTION.



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