Which of the following is a disadvantage of a countertrade agreement?
A) It does not allow firms to finance an export deal when other means are not available.
B) It is unattractive to multinational companies due to its time-consuming and expensive nature.
C) Firms prefer to be paid in hard currency.
D) It is useful only for small companies.
E) It requires exporting firms to obtain a letter of credit form a local bank.

Question

Quizplus · Accepted Answer

Firms prefer to be paid in hard currency because it allows them to use the funds immediately and is less risky than receiving payment in goods or services. Countertrade agreements typically involve payment in goods or services instead of cash, which can be inconvenient for firms that need to cover their expenses in cash.

Which of the Following Is a Disadvantage of a Countertrade