Question : Which of the following is not a type of financial instrument used in international trade?
Option 1: Letters of credit
Option 2: Bills of exchange
Option 3: Credit default swaps
Option 4: Bank guarantees
Answer (1)
11th Jan, 2024
Correct Answer: Credit default swaps
Solution : The correct answer is (c) Credit default swaps
Credit default swaps (CDS) are not typically considered a financial instrument used in international trade. CDS are financial derivatives that allow investors to protect themselves against the risk of default on debt obligations. They are primarily used in financial markets for hedging and speculation purposes, rather than in the context of international trade.
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