General Knowledge - Basic General Knowledge - Discussion

It's international terminology in business transaction.

It is a agreement between seller and buyer.

It's called "LOC" Letter Of Credit.

Inflation is nothing but it is a general increase in prices.

What is inflation?

Me also having doubt how gold market fluctuation relates to share market?

Letter of Credit L/c also known as Documentary Credit is a widely used term to make payment secure in domestic and international trade. The document is issued by a financial organization at the buyer request. Buyer also provide the necessary instructions in preparing the document.

The International Chamber of Commerce (ICC) in the Uniform Custom and Practice for Documentary Credit (UCPDC) defines L/C as:

An arrangement, however named or described, whereby a bank (the Issuing bank) acting at the request and on the instructions of a customer (the Applicant) or on its own behalf :

Is to make a payment to or to the order third party (the beneficiary) or is to accept bills of exchange (drafts) drawn by the beneficiary.

Authorised another bank to effect such payments or to accept and pay such bills of exchange (draft).

Authorised another bank to negotiate against stipulated documents provided that the terms are complied with.

A key principle underlying letter of credit (L/C) is that banks deal only in documents and not in goods. The decision to pay under a letter of credit will be based entirely on whether the documents presented to the bank appear on their face to be in accordance with the terms and conditions of the letter of credit.

How is gold market fluctuation is related to share market?

A letter of credit takes the form of an authorization of payment sent by the importer's bank to the exporter's bank and is cashed like A CHEQUE.

Letter of Credit is sent by the importer's bank to the exporter's bank. Exporter's bank will pay the invoice amount to the exporter on behalf of declaration of importer's bank. importer's bank will pay to the exporter's bank after a fix time--invoice amount+ interest for the fix time+ postal charges on behalf of the importer.

importer's bank will receive the same amount from the importer, after fix time (means it is assume that after fix time, importer surely consume and / or sell the goods.) then the importer will pay the same amount after fix time.

this is the term of the L/C