A Document in Which the Bank Guarantees to Pay a Specific

question 50

Multiple Choice

A document in which the bank guarantees to pay a specific amount of money when a particular even takes place is called

• A)a guarantee
• B)an indemnity
• C)a letter of credit
• D)promissory note
• E)negotiable instrument

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Definitions:

Expected to Expire

Refers to assets or rights that have a limited time frame before they cease to be valid.

Warrant

A financial instrument that gives the holder the right to purchase a company's stock at a specific price before a certain date.

Call Option

A financial contract that gives the holder the right, but not the obligation, to buy a specified amount of an underlying asset at a predetermined price within a specified time frame.

Convertible Bond

A type of bond that can be converted into a predetermined number of the issuer's equity shares.