STANDBY LETTER OF CREDIT Definition

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STANDBY LETTER OF CREDIT is a guarantee of payment. If the beneficiary does not get paid from its customer it can then demand payment from the customers Bank by forwarding the copy of the invoice that was not paid along with predetermined supporting documentation.

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BILL AND HOLD see SHIP IN PLACE.

RISK-FREE RATE is the rate of return available in the market on an investment free of default risk.

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