Final answer:
The statement is true; in an import/export transaction using a letter of credit, the importer's bank, rather than the importer, is obligated to make the payment.
Step-by-step explanation:
When a letter of credit is used in an import/export transaction, it is true that the payment obligation lies with the importer's bank rather than the importer itself.
The letter of credit is a guarantee from the importer's bank to the exporter's bank that payment will be made on-time and for the correct amount, assuming that all terms outlined in the letter of credit are met.
This financial instrument is a key component in international trade, providing a level of security for both parties involved.
When a letter of credit is used in an import/export transaction, the payment obligation lies with the importer's bank rather than the importer itself.
A letter of credit is a financial instrument issued by a bank that guarantees the payment to the exporter in the transaction. It serves as a guarantee to the exporter that they will receive payment as long as they comply with the terms and conditions of the letter of credit.
The importer's bank takes on the payment obligation to the exporter and will make the payment once the necessary documents, such as the bill of lading or proof of shipment, are presented by the exporter.