A firm that is buying something from a supplier may effectively arrange for the bank to pay the outstanding bill using a:
A) banker's acceptance.
B) certificate of deposit.
C) commercial paper.
D) forward option.
E) letter of payment.

Question

Quizplus · Accepted Answer

A banker's acceptance is a time draft that is guaranteed by a bank, making it a secure payment option for the supplier. This allows the firm to effectively arrange for the bank to pay the outstanding bill. Certificate of deposit, commercial paper, forward option, and letter of payment are not typically used in this type of transaction.

A Firm That Is Buying Something from a Supplier May