What International Method of Payment Is Issued by a Bank

question 20

Multiple Choice

What international method of payment is issued by a bank and guarantees payment to a seller provided that the seller has complied with applicable terms and conditions of the particular transaction?

• A) a bill of exchange
• B) a letter of credit
• C) forfaiting
• D) an open account

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Definitions:

Asymmetric Information

A situation where one party in a transaction has more or better information than the other party.

Smart Phone App

A smartphone app is a software application designed to run on smartphones, offering various functionalities ranging from utility and entertainment to productivity and social networking.

Adverse Selection

A situation where asymmetric information leads to the selection of poor risks or unwanted results, commonly discussed in insurance markets and financial services.

Moral Hazard

The situation where one party is more likely to take risks because the negative consequences of those risks will be felt by another party.