Which of the Following Correctly States the Role of Banks

question 13

Multiple Choice

Which of the following correctly states the role of banks in import/export transactions involving a letter of credit (L/C) ?

• A)The importer's bank is the advising and/or confirming bank; the exporter's bank is the issuing bank.
• B)The exporter's bank is the advising and/or confirming bank; the importer's bank is the issuing bank.
• C)The exporter's bank is the advising, confirming, and issuing bank.
• D)The importer's bank is the advising, confirming, and issuing bank.
• E)The exporter's bank is the drawee; the importer's bank is the payee.

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Definitions:

Floating-rate Bond

A bond whose interest payments vary with market interest rates, as opposed to a fixed-rate bond.

Implicit Interest

The interest amount represented in the difference between the present value and the future value of a payment or investment.

Nominal Face Value

The stated value of a financial instrument (e.g., bond) at issuance, unrelated to market value.

Zero Coupon Bond

A debt security that doesn't pay interest but is traded at a deep discount, offering a profit at maturity when the bond is redeemed for its full face value.