Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

This type of L/C obligates the issuing bank to honor drafts drawn in compliance with the credit and can be neither canceled nor modified without

image text in transcribed
image text in transcribed
This type of L/C obligates the issuing bank to honor drafts drawn in compliance with the credit and can be neither canceled nor modified without the consent of all parties, including in particular the beneficiary (exporter). This type of L/C can be canceled or amended at any time before payment; it is intended to serve as a means of arranging payment but not as a guarantee of payment. A confirmed L/C is issued by one bank and can be confirmed by another bank, in which case the confirming bank can honor drafts drawn in compliance with the L/C. An unconfirmed L/C is the obligation only of the issuing bank. An exporter is likely to want a foreign bank's L/C confirmed by a domestic bank when the exporter has doubts about the foreign bank's ability to pay. Such doubts A firm can issue unsecured promissory notes to fund its short-term financing needs. including both domestic and export receivables. However, it is only the large well-known firms with favorable credit ratings that have access to this funding. A beneficiary (exporter) and an applicant (importer) agree on a transaction and the importer then applies to its local bank for the issuance of an L/C. The importer's bank issues an L/C and cuts a sales contract based on its assessment of the importer's creditworthiness, or the bank might require a , cash deposit or other collateral from the importer in advance. These participants are all [Choose] can arise when the exporter is unsure of the financial standing of the foreign bank, of If political or economic conditions in the foreign country are unstable Parties to a Letter of Credit () Commerclal paper: Irravocable 4C Revocable L/C

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

An Introduction To Real Estate Finance

Authors: Edward Glickman

1st Edition

0123786266, 9780123786265

More Books

Students also viewed these Finance questions

Question

n be able to monitor the project and its progression;

Answered: 1 week ago

Question

Define HRM and its relation to organizational management

Answered: 1 week ago

Question

Explain the theoretical issues surrounding the HRM debate

Answered: 1 week ago