Assume the Time from Acceptance to Maturity on a $2,000,000

question 51

Multiple Choice

Assume the time from acceptance to maturity on a $2,000,000 banker's acceptance is 90 days.Further assume that the importing bank's acceptance commission is 1.25 percent and that the market rate for 90-day B/As is 6.0 percent.Calculate the amount the exporter will receive if he discounts the B/A with the importer's bank.

• A)$1,993,750
• B)$1,999,375
• C)$1,963,750
• D)$1,009,375

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Definitions:

Equilibrium Price

Equilibrium price is the market price where the quantity of goods supplied is equal to the quantity of goods demanded.

Willingness to Pay

The maximum amount an individual is prepared to spend on a good or service.

Pumpkin Market

A theoretical or real market where pumpkins are bought and sold, often used to illustrate principles of supply and demand or seasonal markets.

Consumer Surplus

The gap between what consumers are ready to pay in total and what they end up actually paying.