Question : ___________ is a document issued by a bank that guarantees the payment of a specific amount of money to a specified person or entity.
Option 1: Bank guarantee
Option 2: Letter of credit
Option 3: Promissory note
Option 4: Demand draft
Correct Answer: Letter of credit
Solution : The correct answer is (b) Letter of credit
A letter of credit is a document issued by a bank on behalf of a buyer, commonly known as the applicant, to guarantee the payment to a specified person or entity, usually the seller or beneficiary. It serves as a commitment from the issuing bank to pay a specified amount of money to the beneficiary upon the fulfillment of certain conditions stated in the letter of credit.
The letter of credit minimizes the risk for both the buyer and seller in a transaction. For the seller, it provides assurance of payment, while for the buyer, it ensures that payment will only be made upon satisfactory fulfillment of the specified conditions.
Question : A ___________ is an instruction given by the account holder to the bank to pay a specific amount to a particular person.
Option 1: Cheque
Option 2: Demand draft
Option 3: Bill of exchange
Option 4: Promissory note
Question : ______________ is a payment instrument issued by a bank similar to a cheque
Question : The currency note in India is a:
Option 1: Promissory note
Option 2: Cheque
Option 3: Demand draft
Option 4: Bill of exchange
Question : The currency issued by the central bank is called ___________.
Option 1: Fiat money
Option 2: Commodity money
Option 3: Digital money
Option 4: Credit money
Question : The total amount of money cash, coins, and balances in bank is a part of __________.
Option 1: Demand of money
Option 2: Money supply
Option 3: Both a and b
Option 4: None of the above
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