Investor Glossary-letter of creditInvestor Glossary-letter of creditInvestor Glossary-letter of creditInvestor Glossary-letter of creditInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Letter Of Credit

The HTML to link to this page
 

A letter of credit is a document a buyer requests from their bank stating that payment to a seller will be made, in order to reassure the seller that they will not be left empty-handed. The seller receives this letter of credit from the buyer's bank. A letter of credit authorizes the seller to draw drafts up to a stipulated amount - thus the bank ends up paying instead of the buyer. A letter of credit often comes with very specific instructions in order for the seller to obtain the payment(s). To make good on the letter of credit, the seller must often present the necessary documentation within a specified time frame confirming the delivery of goods. A letter of credit is often used in international business, since the letter of credit essentially helps eliminate risk.



Rate this letter of credit definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: 1035 exchange, phantom income, command economy, diluted share, LIBOR, per diem, ex-dividend date, debt service coverage, cancelled check, Zero Cost Collar, dividends payable, implied volatility, 1031 exchange, labor relations, 144a, covered put, irrevocable trust, class C shares, quality assurance, liquidity ratio, annual return, deferred tax, margin rate, reverse mortgage, deferred revenue, inflation, stock market close, limit order, retained earnings, VIX, current ratio, FTSE, Key Rate Duration, balance sheet, APR, required rate of return, stock split, FICO score, 401a, minority interest, open position, real GDP, option premium, wholly-owned subsidiary, risk management, ex-dividend, in escrow, average price per share, EBITDA


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Investor Glossary | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2016 Investor Glossary - All rights reserved - Terms of Use