The issuer of bankers' acceptances is paying a promised yield of 5 percent.What would be the promised yield on securities of the bank guaranteeing this issue?
A) Equivalent or less than 5%
B) Higher than 5%
C) Depends on the bank's liquidity
D) Cannot be determined

Question

Quizplus · Accepted Answer

The promised yield on securities of the bank guaranteeing the issue would be equivalent or less than 5% because the bank's securities are considered less risky than the bankers' acceptances they guarantee.

The Issuer of Bankers' Acceptances Is Paying a Promised Yield