A short-term interest-bearing time draft created by a high-quality bank is called:
A) commercial paper.
B) a bankers acceptance.
C) a Eurodollar deposit.
D) a reverse repurchase agreement.
E) a negotiable CD.

Question

Quizplus · Accepted Answer

A bankers acceptance is a time draft that is used to finance international trade. It is guaranteed by a high-quality bank and is considered a low-risk investment. The bank agrees to pay the face value of the draft on a specific date in the future, and in return, the holder of the draft can sell it to another party for a discounted price or hold it until it matures.

A Short-Term Interest-Bearing Time Draft Created by a High-Quality Bank