If an Issuing Bank Pays Its Obligation Under a Letter

question 50

Multiple Choice

If an issuing bank pays its obligation under a letter of credit without collecting the amount paid from the importer receiving the goods that are subject to the letter of credit:

• A)the bank has essentially financed the purchase of those goods for the importer,and the importer will have had to made arrangements to repay the bank for the amount that it paid plus interest.
• B)the bank can reclaim from the importer the goods that were purchased under the letter of credit.
• C)both the bank and the exporter who supplied the goods covered by the letter of credit have a claim against the importer receiving the goods.
• D)the exporter can reclaim the goods from the importer.

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Definitions:

Problem Finders

Individuals or tools designed to identify issues within a process or system.

Fishbone Diagram

A visual tool used for identifying and organizing the causes of a problem, typically resembling the shape of a fishbone.

Causes

The underlying factors or reasons for an event or situation, often analyzed in problem-solving and decision-making processes.

The Law of Unintended Consequences

The principle that actions, especially those taken on a large scale, can have unanticipated and often undesirable effects.