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Explain the following term/concept:Letter Of Credit. - Organisation of Commerce and Management

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Question

Explain the following term/concept:
Letter Of Credit.

Explain

Solution

  1.  A letter of credit is a guarantee issued by the importer's bank that it Will honor the payment of up to a certain amount of export bills to the bank of the exporter.
  2. It is generally demanded by the exporter country.
  3. It gives assurance to exporter country about its payment of goods exported.
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Introduction of Trade
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Chapter 2: Trade - Exercise Q.2 [Page 44]
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