What Are Commercial Letters of Credit

Multiple Choice

What are commercial letters of credit?

A) They are contractual commitments to make a loan up to a stated amount at a given interest rate in the future.
B) They are contracts that give the holder the right, but not the obligation, to buy or sell an underlying asset at a pre-specified price for a specified time period.
C) They are nonstandard contracts between two parties to deliver and pay for an asset in the future.
D) They are standardized contract guaranteed by organized exchanges to deliver and pay for an asset in the future.
E) They are contingent guarantees sold by an FI to underwrite the trade or commercial performance of the buyer of the guaranty.