Which one of the following describes a banker's acceptance?
A)agreement to loan money in exchange for an agreement by the borrower to offer an asset as collateral
B)written agreement to loan funds in the future once the loan terms have been accepted
C)postdated check with payment guaranteed by a bank
D)agreement by a bank to provide short-term funds for the construction phase of a project
E)the sale of a security by a bank accompanied by an agreement to repurchase the security the following day

Question

Quizplus · Accepted Answer

A banker's acceptance is a type of financial instrument that acts like a postdated check with payment guaranteed by a bank. It involves a bank accepting responsibility for payment by signing a draft or order for payment at a future date. This is often used in international trade transactions as a means of providing security to both the buyer and seller.

Which One of the Following Describes a Banker's Acceptance