Which One of the Following Describes a Banker's Acceptance

question 18

Multiple Choice

Which one of the following describes a banker's acceptance?

• A)agreement to loan money in exchange for an agreement by the borrower to offer an asset as collateral
• B)written agreement to loan funds in the future once the loan terms have been accepted
• C)postdated check with payment guaranteed by a bank
• D)agreement by a bank to provide short-term funds for the construction phase of a project
• E)the sale of a security by a bank accompanied by an agreement to repurchase the security the following day

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Definitions:

Significantly Underpriced

A term used to describe assets or securities that are available for purchase at a price well below their intrinsic value.

Firm Commitment Offers

A type of underwriting agreement where the underwriter buys the entire issue of securities from the issuer and sells them to investors at a profit.

Best Efforts

An agreement stipulating that an underwriter will do their best to sell as much of an offering as possible, without guaranteeing the entire sale.

Lawsuits Against Underwriters

Legal actions taken against financial institutions or individuals responsible for underwriting securities, often related to allegations of misrepresentation or failure to meet regulatory requirements.