Multiple choice

A guarantee which is issued by a bank, guaranteeing the timely payment of installment to the supplier, by the applicant (borrower), for the machinery purchased on a long term credit from the supplier, is called

  1. standby guarantee

  2. performance guarantee

  3. deferred payment guarantee

  4. statutory guarantee
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C Correct answer
Explanation

Deferred Payment Guarantee is a guarantee for a payment which has been deferred or postponed. The necessity to issue deferred payment guarantee arises in case of purchase of capital goods like machinery. 

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