Scenario: Wang's Techno Toys
Ann Wang has been successfully running Wang's Techno Toys that sells high-tech toys in the domestic market. Continually increasing and stiff competition at home has now forced Wang's Techno Toys to enter international markets through direct exports.
-Which of the following methods of export/import financing is Techno Toys' bank using if it acts as an intermediary without accepting financial risk?
A) documentary collection
B) buyback
C) letter of credit
D) advance payment

Question

Quizplus · Accepted Answer

If Techno Toys' bank acts as an intermediary without accepting financial risk, then the best method they could use is documentary collection. In this method, the bank acts on behalf of the exporters by collecting payment from the importer against the release of shipping documents. The bank does not assume any financial risk in this method, making it a safe choice for Techno Toys to enter the international market.