Question

What is the key function of a Letter of Credit (LC) in international trade?

A To provide a loan to the importer. Correct Answer Incorrect Answer
B To facilitate the exchange of goods between countries. Correct Answer Incorrect Answer
C To insure cargo shipments. Correct Answer Incorrect Answer
D To ensure the payment to the exporter upon compliance with specified terms and conditions. Correct Answer Incorrect Answer

Solution

The primary function of a Letter of Credit in international trade is to ensure payment to the exporter upon compliance with specified terms and conditions, reducing risk for both the importer and exporter.

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