A bank's undertaking to pay an exporter on behalf of an importer is a
Answer Details
A bank's undertaking to pay an exporter on behalf of an importer is a "letter of credit". A letter of credit is a financial instrument used in international trade transactions to ensure that the exporter gets paid for their goods or services, and the importer receives the goods or services as agreed upon. The letter of credit is issued by the importer's bank, and it guarantees payment to the exporter's bank upon presentation of the required documents, such as a bill of lading or an invoice. This provides a level of security to both the exporter and the importer, as the exporter knows they will receive payment, and the importer knows that they will receive the goods or services they ordered.