Consider an Exporter That Is Willing to Send Goods to the Importer

question 39

Multiple Choice

Consider an exporter that is willing to send goods to the importer without a guaranteed payment by the bank. The bank provides a loan to the exporter that is backed by the value of the exported goods. This reflects:

• A) accounts receivable financing.
• B) forfaiting.
• C) factoring.
• D) a letter of credit.

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Definitions:

Opportunity Cost

The potential benefit that is given up when one alternative is selected over another.

Manufacturing Company

A business entity engaged in the transformation of raw materials into finished goods for sale by using labor, machines, and chemical or biological processing.

Contribution Margin

The amount by which sales revenue exceeds variable costs; it contributes to covering fixed costs and generating profit.

Variable Categories

Classes or groups of variables in statistics or data analysis that can take on different values and are used to categorize or differentiate data points.