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Difficulty: MediumOccupational and Specialized Registers

To facilitate international trade, an importer's bank issues a formal financial document guaranteeing that an overseas seller will receive full payment provided specified shipping documents are presented. Which specialized banking and trade register term best describes this instrument?

  1. A
    Bill of lading
  2. Letter of creditAnswer
  3. C
    Promissory note
  4. D
    Bill of exchange

Answer

Letter of credit
The term 'Letter of credit' refers to a standardized financial contract issued by a buyer's bank that guarantees payment to a seller upon the verified presentation of stipulated shipping documents.

Step-by-Step Solution

1
Analyze the context given in the stem
Identified key contextual clues: 'importer's bank', 'guaranteeing payment to an overseas seller', 'upon presentation of specified shipping documents'.
Specialized register terms must match the precise professional domain and functional definition established by the context.
2
Evaluate the terms against international banking and trade terminology
The term 'Letter of credit' specifically designates a bank-backed payment undertaking in cross-border trade transactions.
Distinguishing between transport documents (e.g., bill of lading), negotiable debt instruments (e.g., bill of exchange, promissory note), and bank credit guarantees (letter of credit) isolates the correct register choice.

Key Concept

Banking and International Trade Register
Estimated Time:1m 0s
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Topics

Occupational and Specialized Registers

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