Question : Which of the following is not a type of trade finance?
Option 1: Letters of credit
Option 2: Factoring
Option 3: Countertrade
Option 4: Foreign direct investment
Answer (1)
22nd Jan, 2024
Correct Answer: Foreign direct investment
Solution : The correct answer is (d) Foreign direct investment
Foreign direct investment (FDI) is not a type of trade finance. FDI refers to the investment made by a company or individual in another country to establish or expand a business operation. It involves acquiring a significant ownership stake in a foreign company or establishing a new subsidiary. FDI is a form of long-term investment and is not specifically related to trade finance.
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