Multiple choice general knowledge

Guarantee to an exporter that the importer of his goods will pay immediately for the goods ordered by him, is known as

  1. Letter of Credit (L/C)

  2. laissezfaire

  3. inflation

  4. None of the above
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A Correct answer
Explanation

A Letter of Credit (L/C) is a financial instrument issued by a bank guaranteeing payment to an exporter, provided that specified terms and conditions are met. It eliminates credit risk for exporters by substituting the bank's creditworthiness for the importer's, ensuring immediate payment upon compliant documentation presentation.

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