If the market rate for 90-day B/As is 6.0 percent, calculate the amount the exporter will receive if he discounts the B/A with the importer's bank.

Question

Quizplus · Accepted Answer

The correct answer is A because the exporter will receive $2,945,625 if he discounts the B/A with the importer's bank. The formula for calculating the amount the exporter will receive is:Amount the exporter will receive = Face value of the B/A * (1 - (Discount rate * Time to maturity))In this case, the face value of the B/A is $3,000,000, the discount rate is 6.0%, and the time to maturity is 90 days. Plugging these values into the formula, we get:Amount the exporter will receive = $3,000,000 * (1 - (0.06 * 90/360))= $3,000,000 * (1 - 0.015)= $3,000,000 * 0.985= $2,945,625

If the Market Rate for 90-Day B/As Is 6