Firm's promise to pay and is backed or guaranteed by bank is classified as____________?
Correct answer: B. Banker's acceptance
- A. Customer's acceptance
- B. Banker's acceptance
- C. Federal acceptance
- D. Treasury acceptance
Explanation
A banker’s acceptance is a bank-guaranteed promise to pay, commonly used to finance trade transactions. The bank assumes responsibility for payment at maturity.
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About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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