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Questions and Answers
Which of the following is NOT a common method of financing international trade?
Which of the following is NOT a common method of financing international trade?
- Cash in advance
- Letters of credit
- Bartering (correct)
- Trade credit
What is the primary purpose of using letters of credit in international trade?
What is the primary purpose of using letters of credit in international trade?
- To negotiate favorable trade terms
- To secure a loan for the importer
- To provide a guarantee of payment to the exporter (correct)
- To facilitate currency exchange
Which of the following is a disadvantage of using cash in advance as a method of financing international trade?
Which of the following is a disadvantage of using cash in advance as a method of financing international trade?
- Lack of flexibility in payment terms
- Currency exchange rate fluctuations
- Risk of non-payment by the importer
- Lengthy processing time (correct)
