Which entity issues a Letter of Credit?

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Multiple Choice

Which entity issues a Letter of Credit?

Explanation:
A Letter of Credit is a payment guarantee issued by a bank on behalf of the importer to the exporter. The bank is the issuer, promising to pay the exporter provided the seller presents the required documents and complies with the terms of the LC. The importer is usually the applicant who asks the bank to open the LC, but the bank is the entity that actually issues it. A carrier handles transport, not payments, and a government does not issue LCs in ordinary trade finance. This arrangement gives the seller payment assurance while shifting the payment risk to the bank once the document conditions are met.

A Letter of Credit is a payment guarantee issued by a bank on behalf of the importer to the exporter. The bank is the issuer, promising to pay the exporter provided the seller presents the required documents and complies with the terms of the LC. The importer is usually the applicant who asks the bank to open the LC, but the bank is the entity that actually issues it. A carrier handles transport, not payments, and a government does not issue LCs in ordinary trade finance. This arrangement gives the seller payment assurance while shifting the payment risk to the bank once the document conditions are met.

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