Which of the following is true of a letter of credit in international trade?
A. No cash deposit or collateral is required from the importer.
B. The exporter pays the trusted third party (usually a bank) a fee for the service.
C. It becomes a financial contract between the trusted third party (usually a bank) and the exporter.
D. It is issued by the exporter at the request of the importer.
E. The creditworthiness of the importer is irrelevant when issuing a letter of credit.
C
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In investors’ minds, Wilson’s share buyback could be a signal that the company:
Janet Wu is treasurer of Wilson Paper Company, a manufacturer of paper products for the office and school markets. Wilson Paper is selling one of its divisions for $70 million cash. Wu is considering whether to recommend a special dividend of $70 million or a repurchase of 2 million shares of Wilson common stock in the open market. She is reviewing some possible effects of the buyback with the company’s financial analyst. Wilson has a longterm record of gradually increasing earnings and dividends. Wilson’s board has also approved capital spending of $15 million to be entirely funded out of this year’s earnings. Book value of equity $750 million ($30 a share) Shares outstanding 25 million 12-month trading range $25–$35 Current share price $35 After-tax cost of borrowing 7% 60 Learning Outcomes, Summary Overview, and Problems part-i-07 13 January 2012; 10:21:1 Estimated full year earnings $25 million Last year’s dividends $9 million Target debt/equity (market value) 35/65 A. is decreasing its financial leverage. B. views its shares as undervalued in the marketplace. C. has more investment opportunities than it could fund internally.
An owner selling her property as an FSBO asks her friend who is a broker associate to complete a Contract to Buy and Sell Real Estate and help her with the closing. The broker associate agrees to help and asks to be paid $500 under the table after the property closes. Which is TRUE about the broker associate?
a. If the broker associate completes the transaction without a listing contract with the brokerage firm, the associate will be in violation of Conway-Bogue b. The broker associate may complete the contract but may not accept the fee c. The broker associate would be in violation of Rule F for accepting the fee without going through the brokerage firm d. The broker associate may complete the contract and accept the fee as long as income taxes are paid