SIE practice questionhardMoney Market — Banker's Acceptances
A banker's acceptance is primarily used to:
- AFund municipal infrastructure projects
- BProvide long-term corporate financing
- CFinance domestic real estate transactions
- DFacilitate international trade by guaranteeing payment for imported/exported goods✓ Correct answer
Explanation
Why D — Facilitate international trade by guaranteeing payment for imported/exported goods
Banker's acceptances are short-term money market instruments used primarily to facilitate international trade. They represent a bank's guarantee (acceptance) to pay a specified amount on a future date, typically related to the shipment of goods. They are sold at a discount and mature at face value, similar to T-bills and commercial paper.
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