The Time from Acceptance to Maturity on a $1,000,000 Banker's

question 26

Essay

The time from acceptance to maturity on a $1,000,000 banker's acceptance is 90 days.The importing bank's acceptance commission is 3½ percent and that the market rate for 90-day B/As is 5 percent.
If the exporter's opportunity cost of capital is 11 percent,should he discount the B/A or hold it to maturity?

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