BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A contractual agreement made between different parties to compensate for any damages or losses.
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It is a letter from a bank, guaranteeing that a buyer’s payment to a seller will be received on time and for the correct amount.
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A solemn promise or agreement to do or refrain from doing something.
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A security interest on real property grant to a lender.
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Detailed explanation-1: -A letter of credit, or a credit letter, is a letter from a bank guaranteeing that a buyer’s payment to a seller will be received on time and for the correct amount. If the buyer is unable to make a payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase.
Detailed explanation-2: -A Letter of Credit is an arrangement whereby Bank acting at the request of a customer (Importer / Buyer), undertakes to pay for the goods / services, to a third party (Exporter / Beneficiary) by a given date, on documents being presented in compliance with the conditions laid down.
Detailed explanation-3: -The letter of credit is also known as the credit letter, this letter is essentially a form of guarantee provided by the bank on your behalf to a seller from whom you have purchased something that they will get their payment on time and for the appropriate amount.
Detailed explanation-4: -A bank guarantee is a commitment made by a finance company that if a debtor fails to repay a loan, the bank will pay the amount. Meanwhile, letters of credit are essential in international trade, as it allows two parties to transact without worrying.