A trade credit is a business-to-business (B2B) agreement in which a customer can purchase goods on account without paying cash up front, paying the supplier at a later scheduled date.

True False

Trade credit cost refers to the dollar amount of checks or other negotiable instruments that are in the process of collection by a bank, financial institution, or other entity over a certain period, divided by the number of days in the period.

True False

Which of the following is not an advantage of a Letter of Credit to the Exporter:

A.) Exporter agrees in advance to all requirements for payment under the Letter of Credit. If the Letter of Credit is not issued as agreed, the Exporter is not obligated to ship against it.

B.) Documents are prepared and presented in strict compliance with the requirements stipulated in the Letter of Credit for security

C.) Importers can easily open Letters of Credit which consequently promotes export growth.

D.) Exporter can further reduce foreign political and bank credit risk by requesting confirmation of the Letter of Credit by a Canadian bank.