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WAEC Commerce 2005 Question 17

Question 17

Foreign Trade

A bank's undertaking to pay an exporter on behalf of an importer is a

  1. A.documentary credit
  2. B.letter of credit
  3. C.letter of hypothecation
  4. D.bill of exchange
Show the answer and explanation

Answer: B (letter of credit)

Explanation

A letter of credit is the bank's promise to pay the exporter for the importer.