In the Context of Methods of Payment in International Business

question 36

Multiple Choice

In the context of methods of payment in international business, unlike cash in advance, a commercial letter of credit:

• A) is a safer method of payment for an exporter.
• B) is not a safe method of payment for an importer.
• C) provides a level of protection to both the exporter and the importer.
• D) does not transfer ownership of goods to an importer.

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Definitions:

Risky Driving

Driving behavior that increases the likelihood of an accident or harm, such as speeding, driving under the influence of alcohol or drugs, or not obeying traffic signals.

Safe Drivers

Individuals who exhibit behaviors and practices that significantly reduce the likelihood of being involved in accidents or receiving traffic citations.

Information Asymmetry

A situation where one party in a transaction has more or superior information compared to another. This can cause market inefficiencies and power imbalances.

Moral Hazard

The situation where one party is more likely to take risks because another party bears the consequences.