Question

In which of the following forms of export financing does a bank assume a financial obligation?

A) with an L/C but not a documentary collection
B) with a documentary collection but not an L/C
C) neither an L/C nor a documentary collection requires a bank to assume financial obligation
D) with either an L/C or a collection letter
E) with both an L/C and a documentary collection

Answer 1

A bank assumes a financial obligation in export financing with both a Letter of Credit (L/C) and a documentary collection.

Step-by-step explanation:

In the form of export financing, a bank assumes a financial obligation in option E) with both a Letter of Credit (L/C) and a documentary collection. Both forms involve the bank providing financial assurance to the exporter and assuming the responsibility of ensuring that payment is made by the importer.