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International Trade

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Assume the time from acceptance to maturity on $2,000,000 banker's acceptance is 90 days. Further assume that the importing bank's acceptance commission is 1.25 percent and that the market rate for 90-day B/A is 7 percent. Determine the amount the exporter will receive if he holds the B/A until maturity and also the amount the exporter will receive if he discounts the B/A with the importer's bank.

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Solution Preview

Assume the time from acceptance to maturity on $2,000,000 banker's acceptance is 90 days. Further assume that the importing bank's acceptance commission is 1.25 percent and that the market rate for 90-day B/A is 7 percent. Determine the amount the exporter will receive if he holds the B/A until maturity and also the amount the exporter will receive if he discounts the B/A with the importer's bank.

From the question above, you have to determine the amount the exporter will receive if he holds the B/A ...

Solution Summary

The worked solution shows how to determine the amount the exporter will receive if he holds the B/A until maturity and also the amount the exporter will receive if he discounts the B/A with the importer's bank. It also determine the amount the exporter will receive if he holds the B/A until maturity and the amount the exporter will receive if he discounts the B/A with the importer's bank.

$2.19