What Is a Letter of Credit? - Definition, Types & Example Video

Instructions:

Choose an answer and hit 'next'. You will receive your score and answers at the end.

question 1 of 3

Letters of credit can be used in:

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1. How often are revocable letters of credit currently used in international transactions?

2. A confirmed letter of credit means that the letter of credit has been:

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About This Quiz & Worksheet

A letter of credit is a document issued by a third party that guarantees payment for goods or services when the seller provides acceptable documentation. Use the quiz/worksheet combination to assess your understanding of the type of credit letters, their functions, and other facts discussed in the lesson.

Quiz & Worksheet Goals

These assessments will test you on the following:

  • The uses of letters of credit
  • The use of revocable letters of credit
  • The function of a confirmed letter of credit
  • Recipient of payment via transferrable letters of credit

Skills Practiced

Students will practice the following skills:

  • Information Recall- access the knowledge you've gained regarding the use of letters of credit
  • Interpreting Information- verify that you can read information regarding the use of various types of letters of credit
  • Reading Comprehension- ensure that you draw the most important information from the What is a Letter of Credit?- Definition, Types, & Examples lesson

Additional Learning

To learn more about letters of credit, review the accompanying lesson, What is a Letter of Credit? - Definition, Types, & Example. Objectives covered include:

  • Define letter of credit
  • Know the participants of a letter of credit
  • Review the types and features of letters of credit
  • Understand the risks in letter of credit transactions
  • Know what a letter of credit is like in action
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