The Combination of a Letter of Credit, a Sight Draft

question 30

Multiple Choice

The combination of a letter of credit, a sight draft, and an order bill of lading protect both parties in international transactions from which of the following?

• A)The risk of noncompletion.
• B)The risk of foreign exchange risk (when combined with a various hedging techniques).
• C)The risk that financing will not be available due to foreign exchange risk.
• D)All of these risks are reduced when using these trade implements.

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Definitions:

Atom's Nucleus

The very small, dense region at the center of an atom, containing protons and neutrons, and responsible for most of an atom's mass.

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Cells in the retina that convert light into electrical signals, enabling vision.

Emergency Lights

Devices that provide illumination and visual signaling during power outages or emergency situations.

Müller-Lyer

An optical illusion involving lines of equal length that appear to be different lengths due to the addition of fins or arrows at the ends.