Credit instrument - SS2 Commerce Past Questions and Answers - page 1
What is the purpose of a letter of credit?
Guaranteeing payment to the buyer
Guaranteeing payment to the seller
Guaranteeing payment to the issuing bank
Who is the payee in a promissory note?
The maker
The drawee
The beneficiary
What is the primary function of a bill of exchange?
Issuing loans to corporations
Guaranteeing payments in international trade
Facilitating electronic transactions
What is the main characteristic of debentures?
They represent ownership in a company
They have a fixed maturity date
They are physical paper documents
How are vouchers commonly used?
To guarantee loan repayments
To track financial transactions
To issue shares in a company
Define a promissory note in simple terms.
A promissory note is a written promise made by one party to pay a specified amount of money to another party within a specified time frame.
What is the purpose of a letter of credit in international trade?
The purpose of a letter of credit is to provide assurance and guarantee payment to the seller/exporter by a bank on behalf of the buyer/importer.