New Enroll in RBI Grade B New Batch - Starts on May 21

    Question

    What is the primary distinction between factoring and

    forfaiting?
    A Factoring is used only for domestic trade, while forfaiting is used for international trade Correct Answer Incorrect Answer
    B Forfaiting involves two stages of payment Correct Answer Incorrect Answer
    C Factoring is always without recourse Correct Answer Incorrect Answer
    D Factoring deals with larger sums of money than forfaiting Correct Answer Incorrect Answer
    E Factoring involves financial institutions only, whereas forfaiting involves individuals Correct Answer Incorrect Answer

    Solution

    Factoring is used for both domestic and international trade, whereas forfaiting is exclusively for international trade transactions. Factoring can be with or without recourse and involves smaller sums of money compared to forfaiting, which is generally for larger sums.

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