Which of the following makes a letter of credit the most popular method of payment in export transactions?
A) the exporter cannot sell any letters of credit in its possession
B) the method requires a limited amount of documentation and is easy to cancel
C) the exporter bills customers with strong credit ratings
D) the interests of the seller and buyer are protected simultaneously

Question

Quizplus · Accepted Answer

The letter of credit method of payment is popular in export transactions because it protects the interests of both the seller and the buyer. The seller is assured of payment upon meeting the agreed-upon terms and conditions of the letter of credit, while the buyer is assured that payment will not be made until the agreed-upon documents and goods are received. This reduces the risk for both parties and makes the transaction more secure. Choices A, B, and C are not accurate reasons for the popularity of the letter of credit method.

Which of the Following Makes a Letter of Credit the Most