Assume the time from acceptance to maturity on a $10,000,000 banker's acceptance is 90 days.Further assume that the importing bank's acceptance commission is 1 percent and that the market rate for 90-day B/As is 3.0 percent.Calculate the amount the exporter will receive if he holds it to maturity.

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Quizplus · Accepted Answer

The exporter will receive the face value minus the acceptance commission. The commission is 1% of $10,000,000, which is $100,000. Therefore, the amount received is $10,000,000 - $100,000 = $9,900,000. However, the market rate for 90-day B/As is 3.0%, which is an annual rate. The discount for 90 days is (3%/4) * $10,000,000 = $75,000. Thus, the amount received is $9,900,000 - $75,000 = $9,975,000.

Assume the Time from Acceptance to Maturity on a $10,000,000