For an Importer, What Is a Disadvantage of Using a Letter

question 54

Multiple Choice

For an importer, what is a disadvantage of using a letter of credit for international transactions?

• A) It results in the importer losing control over the process of trading.
• B) It reduces the exporter's level of trust in the importer.
• C) It reduces the importer's ability to borrow funds for other purposes.
• D) It requires the importer to repay the loan even before the merchandise is sold.
• E) It is not issued at the importer's request.

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Definitions:

Future Profitability

Future profitability refers to an entity's potential to generate earnings over upcoming periods, indicating its financial prospects.

Horizontal Analysis

A financial analysis technique that compares historical financial information over a series of periods to identify trends and growth patterns.

Horizontal Analysis

Also known as trend analysis, it compares financial statements line items over several periods to identify changes and trends.