New RBI Grade B 2025 Notification will come Soon! Enroll Here

    Question

    What is the key function of a Letter of Credit (LC) in

    international trade?
    A To provide a loan to the importer. Correct Answer Incorrect Answer
    B To facilitate the exchange of goods between countries. Correct Answer Incorrect Answer
    C To insure cargo shipments. Correct Answer Incorrect Answer
    D To ensure the payment to the exporter upon compliance with specified terms and conditions. Correct Answer Incorrect Answer

    Solution

    The primary function of a Letter of Credit in international trade is to ensure payment to the exporter upon compliance with specified terms and conditions, reducing risk for both the importer and exporter.

    Practice Next