The Edmond Wine and Cheese Shop Wants to Buy 30

question 56

Multiple Choice

The Edmond Wine and Cheese shop wants to buy 30 cases of French Champagne on credit.Bank of America writes a letter of credit stating that the Edmond Wine and Cheese shop is a good risk and that if they do not pay off the loan,Bank of America will.Which of the following roles is the bank performing?

• A)The intermediation role
• B)The payments role
• C)The risk management role
• D)The guarantor role
• E)The policy role

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Definitions:

Funding

The act of providing financial resources, typically in the form of money, or other values such as effort or time, to support a program, project, business, or individual.

Scarcity

A fundamental economic problem of having seemingly unlimited human wants in a world with limited resources, which leads to the necessity of making choices on how to allocate resources.

Resources

Assets or inputs used in the production of goods and services, such as time, labor, and capital.

Economy

An extensive network of activities related to producing, consuming, and exchanging that assists in allocating limited resources.