Which of the Following Is the Most Secure Method of Payment

question 41

Multiple Choice

Which of the following is the most secure method of payment for an exporter?

• A) Episode payment
• B) Letters of credit
• C) Open account
• D) Documentary collections
• E) Bundled payment

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Definitions:

Opportunity Costs

The loss of potential gain from other alternatives when one alternative is chosen.

Explicit Costs

Direct, out-of-pocket payments for expenses incurred in conducting business, such as wages, rent, and materials.

Implicit Costs

The opportunity costs that are not directly paid for or incurred in transactions but represent real costs to a business.

Implicit Costs

refer to the opportunity costs that occur when a company uses internal resources that could have been used for another purpose but do not directly affect cash flow.