Which of the following is true about international banking and payments?

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a. A letter of credit backed by an international bank is the safest method of dealing with internati

b. Buying on open account is usually best for smaller firms.

c. A commercial letter of credit is not irrevocable.

d. A commercial letter of credit offers payment protection to both parties.

a. Incorrect. A letter of credit backed by an international bank is generally considered one of the safest methods of dealing with international transactions, as it provides payment protection for both the buyer and the seller.

b. Incorrect. Buying on open account is usually best for larger, more established firms that have a strong relationship with the seller. Smaller firms may prefer the payment protection offered by a letter of credit.

c. Incorrect. A commercial letter of credit is irrevocable, meaning that the terms of the letter of credit cannot be changed or canceled without the agreement of all parties involved.

d. Correct. A commercial letter of credit offers payment protection to both the buyer and the seller. The buyer is protected because the bank guarantees payment to the seller upon presentation of the required documents. The seller is protected because they can be assured of receiving payment as long as they comply with the terms of the letter of credit.