An exporter demands a letter of credit in order to
A)guarantee safe delivery of goods to the importer.
B)guarantee receipt of payment from the importer upon receipt of the goods.
C)protect against adverse changes in foreign exchange rates.
D)protect against adverse changes in international interest rates.
E)ascertain the creditworthiness of the importer.

Question

Quizplus · Accepted Answer

An exporter demands a letter of credit in order to guarantee receipt of payment from the importer upon receipt of the goods. A letter of credit acts as a guarantee that the importer's bank will pay the exporter, even if the importer fails to do so. This reduces the risk of non-payment for the exporter, which is especially important when doing business with unfamiliar or unstable markets.

An Exporter Demands a Letter of Credit in Order to