The correct answer is: A. Confirmed and irrecoverable
A confirmed and irrecoverable letter of credit is the strongest type of letter of credit because it provides the most protection for the seller. A confirmed letter of credit is one that is guaranteed by a bank in the seller’s country, in addition to the bank in the buyer’s country. This means that if the buyer’s bank fails to pay the seller, the seller can still collect the money from the confirming bank. An irrecoverable letter of credit is one that cannot be canceled by the buyer, even if the buyer has not yet received the goods. This means that the seller is guaranteed to be paid, even if the buyer changes their mind about the purchase.
A cancelable letter of credit is one that can be canceled by the buyer, even if the seller has already shipped the goods. This means that the seller is not guaranteed to be paid, even if they have fulfilled their obligations under the contract.
An irrecoverable letter of credit is one that cannot be canceled by the buyer, even if the buyer has not yet received the goods. This means that the seller is guaranteed to be paid, even if the buyer changes their mind about the purchase.
Therefore, the strongest letter of credit is a confirmed and irrecoverable letter of credit.