Chapter 13.2, Problem 3QS2

Summary Introduction

To Determine:

Mention the term for the type of finance in which a document is issued by the importer’s bank stating that the after the presentation of the document by the exporter, the payment will be done in full.

Introduction:

Trade finance is a way of financing the business in which bank or other financial institution act as an intermediary.

Letter of credit is one of the types of trade financing. In this, the importer’s bank issues a document stating that the exporter will get paid in full after presenting them the proper documents of the transaction.