OMVIC Practice Test

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Dive into the OMVIC Practice Test and test your knowledge on laws, regulations, and ethical practices in the automotive industry. Perfect for aspiring dealers and salespersons to validate their expertise!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

What is the irrevocable letter of credit amount required if a dealer offers their own extended warranties?

$100,000
$250,000
$500,000
$1,000,000

The correct answer is: $100,000

An irrevocable letter of credit is a commitment from a bank to pay a specified amount to a designated party. This amount serves as a form of financial security for the party requesting the letter of credit. In this scenario, the dealer offering their own extended warranties would need a letter of credit in case they are unable to fulfill their warranty obligations. Since the amount of coverage required for extended warranties is typically lower than other types of warranties, such as vehicle warranties, the required amount for the letter of credit would also be lower. Option A, $100,000, is the most appropriate and realistic amount to cover potential warranty costs for a dealer. The other options, B, C, and D, represent larger amounts that may not accurately reflect the expected warranty costs.