Which of the Following Completely Eliminates the Risk of Nonpayment

question 79

Multiple Choice

Which of the following completely eliminates the risk of nonpayment by an importer or a bank in an international transaction?

• A)documentary credit (letter of credit)
• B)documentary collection
• C)cash in advance
• D)sales on open account
• E)draft

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Definitions:

Commercially Reasonable

Actions that a prudent person would reasonably take under comparable circumstances, particularly in business transactions.

Notice of Dishonor

A formal notification that a negotiable instrument, like a check, has been refused payment.

Dishonored

Refers to the refusal or inability to pay a financial obligation when due, such as a bounced check or a default on a payment.

Notice of Dishonor

A formal notification indicating that a financial instrument, like a check or draft, has been presented for payment and refused.