When a Letter of Credit Is Used in Exporting Arrangements

question 127

Multiple Choice

When a letter of credit is used in exporting arrangements

• A)no cash deposit or collateral is required from the importer.
• B)the exporter pays the bank a fee for the service.
• C)the letter of credit becomes a financial contract between the bank and the exporter.
• D)the importer directly pays the exporter upon delivery of goods.

---

Definitions:

Building Trust

Developing confidence and reliability in relationships, whether personal, professional, or between organizations, often through consistent actions, transparency, and ethical behavior.

Social Contract

a theoretical framework suggesting that individuals have consented, either explicitly or implicitly, to surrender some of their freedoms and submit to the authority of the ruler or magistrate (or to the decision of a majority), in exchange for protection of their remaining rights.

Zero-Sum Game

A situation in competitive theory where one party's gain is exactly balanced by the losses of other participating parties.

Constant-Sum Game

A situation in which the total resources or benefits available to all participants do not vary based on their actions or decisions.