In Economic Terms, the Letters of Credit (LCs) and Stand-By

Multiple Choice

In economic terms, the letters of credit (LCs) and stand-by letters of credit SLCs sold by an FI

A) are contractual commitments to make a loan up to a stated amount at a given interest rate in the future.
B) are insurance against the frequency or severity of some particular future occurrence.
C) are nonstandard contracts between two parties to deliver and pay for an asset in the future.
D) are standardized contract guaranteed by organized exchanges to deliver and pay for an asset in the future.
E) Answers C and D only.