When a Company Discounts an Interest-Bearing Note at a Bank

question 185

Multiple Choice

When a company discounts an interest-bearing note at a bank with recourse:

• A) The company is assured payment at maturity.
• B) The company will receive the full amount of the note plus interest.
• C) The company has a contingent liability from the time the note is discounted until its maturity date.
• D) The bank assumes the credit risk on non-payment at the maturity date.

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Definitions:

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