Which of the Following Is NOTan Advantage to the Importer

question 26

Multiple Choice

Which of the following is NOTan advantage to the importer of L/C financing?

• A)any documents required are carefully inspected by clerks with years of experience
• B)an L/C is about as good as cash in advance
• C)the importer using an L/C can usually command better credit terms and/or prices
• D)L/C financing may be cheaper than the alternatives
• E)all of the above are advantages of the L/C to the importer

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Definitions:

Weighted Average Cost

A calculation that takes into account the various costs of goods based on their relative weights, to arrive at an average cost per unit.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision, representing the benefits that could have been received but were sacrificed in the pursuit of another option.

Debt-Equity Ratio

The quotient of total liabilities and shareholders' equity, representing a company's leverage financially.