Export credit insurance protects an exporter against the possibility o

QUESTION

Export credit insurance protects an exporter against the possibility of a foreign importer’s default on payment when there is a lack of a letter of credit

Indicate whether the statement is true or false.

ANSWER

TRUE
The lack of a letter of credit exposes an exporter to the risk that a foreign importer will default on payment. The exporter can insure against this possibility by buying export credit insurance. If the customer defaults, the insurance firm will cover a major portion of the loss