How do international and domestic practices of settling trade transactions differ?
A) In an international transaction, a formal promise to pay is required before the buyer can obtain the merchandise.
B) In an international transaction, the seller usually ships merchandise on an open account.
C) In a domestic transaction, a draft is used to settle trade transactions.
D) In an international transaction, the exporter sends a commercial invoice that specifies the amount due and terms of payment to the importer.
E) In an international transaction, there is more trust between the exporter and the importer than in a domestic transaction.

Question

Quizplus · Accepted Answer

In international transactions, a formal promise to pay, such as a letter of credit, is often required to ensure payment before the buyer can obtain the merchandise, due to the higher risks and lack of trust compared to domestic transactions.

How Do International and Domestic Practices of Settling Trade Transactions