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Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Letter of Credit

A statement issued by a bank to the buyer of a good stating that the seller will receive payment on time and in the correct amount. If the buyer fails to make payment, the bank will do so on his/her behalf. The buyer presents a letter of credit to the seller, which eliminates the risk that the seller will not be paid. Letters of credit have become very common in international commerce, as distance and other factors make it difficult for sellers to establish the creditworthiness of every buyer.

Line of Credit

An agreement between a bank and a company or an individual to provide a certain amount in loans on demand from the borrower. The borrower is under no obligation to actually take out a loan at any particular time, but may take part of the funds at any time over a period of several years. This agreement is fairly common in situations in which a business must make payroll but does not always have the operating income to do so, especially when its operating income is seasonal or otherwise varies from month to month. It is also called open-end credit or a revolving line of credit. See also: Credit Card.
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Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

letter of credit (LOC)

(Pronounce each letter of the abbreviation;it is not pronounced as a word.) An instrument issued by a bank or other financial institution (issuer) agreeing that it will pay money to another (beneficiary), on behalf of the bank's customer (account party), upon the happening of certain named events.There is usually an issuance fee of 1 to 2 percent of the face amount of the LOC.Modern banking regulations require the same underwriting as for a commercial loan.The LOC will set out the exact prerequisites to be met before the bank will issue payment. These usually include a particular time and place to present the original letter of credit and the exact documents that must accompany the letter.Some states still follow the old “strict compliance”rule holding that any deviation from the instructions, no matter how minor, will justify the bank in refusing to pay. Others follow a “substantial compliance” rule, so that minor typographical or syntax errors in the presenting documents will not justify nonpayment. See also the two types of letters of credit: documentary letter of credit and standby letter of credit.

The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.
References in periodicals archive ?
Type loc.: Mozambique exact habitat and depth given as 'unknown' in original description, but holotype label and catalogue state 'trawled north of Beira in 10-20 fathoms [-18-37 m] [H.
MHA sources said that cross LoC trade was also being used as a regular channel of funneling of drugs such as cocaine, brown sugar and heroin into the Valley adversely impacting the youth, thereby converting many of them into addicts of such life-threatening drugs.
Perhaps few actions are as futile as the LoC attacks that continue with no end in sight.
He said community bunkers would be constructed in educational institutions and villages along the LoC. First aid posts were also being set up in cooperation with community in the regions close to border to enable the affectees to receive first aid in emergencies, he added.
I can assure you that being on an LOC will not take up a lot of time.
'Some of these LOC cases are now in the process of execution, while the others are on appeal at the Ossec [Office of the Secretary].
Frustrated with the current situation, the Jammu Kashmir Liberation Front and its allied nationalist parties have now demanded immediate demilitarisation and cessation of hostilities on both sides of the LoC. On March 16, last Friday, the JKLF staged a big peace rally along the LoC in Poonch district of AJK.
The Line of Control (LoC), referred to as ceasefire line (CFL) until 1971 divides the pre-1947 state of Jammu and Kashmir into Indian and Pakistani Administered zones of Kashmir.
The microfluidic technology that is at the base of the LOC has its genesis in space; it's a by-product of NASA's and DARPA's investments in micro-lithography in the 1960s--for making what became computer chips--and in the development of MEMS in the 1990s.
In a smoke-filled cafe near Hanoi's West Lake, the elderly Nguyen Van Loc sings old love songs to a well-dressed crowd.