Which of the following is a major advantage of using a letter of credit?
A) It gives the importer time to resell the merchandise before payment.
B) It guarantees the exporter preexport financing.
C) It helps international traders engage in trade with trust.
D) It guarantees the importer extra funds for other purposes.

Question

Quizplus · Accepted Answer

The great advantage of using a letter of credit system is that both the importer and the exporter are likely to trust reputable banks, even if they do not trust each other. Once the exporter has seen a letter of credit, he knows that he is guaranteed payment and will ship the merchandise.

Which of the Following Is a Major Advantage of Using