A Contract Written by a Bank to Guarantee That the Bank

question 41

Multiple Choice

A contract written by a bank to guarantee that the bank will pay the exporter the amount of money owed by the importer is called a:

• A) Letter of credit
• B) Export contract
• C) Import contract
• D) Contract guarantee

---

Definitions:

Operating Lease

A leasing agreement allowing the lessee to use an asset temporarily without transferring the risks and rewards of ownership.

Sales-Type Lease

A leasing arrangement where the lessor recognizes immediate profit on the leased asset as in a sale, based on the difference between the fair value of the leased asset and its cost or carrying amount.

Direct-Financing Lease

A lease agreement where the lessor effectively finances the asset for the lessee, recognizing interest revenue over the lease term.

Credit-Approved Customers

Individuals or entities that have been evaluated and deemed creditworthy by a lender, allowing them to receive goods or services in advance of payment.