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    Question

    Which of the following statements is true about a Letter

    of Credit (LC)?
    A It is a loan provided to the importer by the exporter Correct Answer Incorrect Answer
    B It is a guarantee provided by the importer to the bank Correct Answer Incorrect Answer
    C It ensures payment to the exporter by the importer's bank, subject to compliance Correct Answer Incorrect Answer
    D It is a form of overdraft facility Correct Answer Incorrect Answer
    E It is a type of insurance Correct Answer Incorrect Answer

    Solution

    LC assures the exporter that the payment will be made by the bank upon fulfillment of terms.

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