Which of the following about bank bills is incorrect?
A) For a bank bill, the drawer has the secondary liability to pay the holder of the bill at maturity.
B) A commercial bank generally carries out the role of an acceptor on a bill.
C) With a bank as an acceptor, it makes it easier to sell the bill at a higher yield.
D) When the discounter discounts the face value of the bill they provide the funds to the borrower.

Question

Quizplus · Accepted Answer

A bank as an acceptor generally makes the bill more attractive to buyers because it reduces the risk of default, thereby allowing it to be sold at a lower yield, not a higher one. Lower yield reflects the lower risk associated with the bank's guarantee.

Which of the Following About Bank Bills Is Incorrect