Answer (C) is correct . Under a prepayment arrangement, the exporter will not ship the goods until the buyer has wired payment into the exporter’s bank account. First-time buyers of unknown creditworthiness and buyers in financially troubled countries are often required to prepay. Established buyers are rarely willing to assume the risk that comes with prepayment.
Answer (A) is incorrect because Payment on an open account is the riskiest method.
Answer (B) is incorrect because A letter of credit is subject to the risk that discrepancies in the presentation to the issuing bank may cause nonpayment.
Answer (D) is incorrect because Payment at a specific future time is riskier than payment already received.
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