Based on the following information, answer the questions below. The time from acceptance to maturity on a $2.25m Bankers Acceptance is 210 days. The importers banks acceptance commission is 4% and the market rate for 210 day BAs is 8%

a) What amount will the exporter receive if they holds the BA to maturity. Answer to the nearest dollar (2 marks)

Answer: $Answer

b) What amount will the exporter receive if he discounts the B/A. Answer to the nearest dollar (2 Marks)

Answer: $Answer

Note: the data contained in these questions is independent from that above

c) The discounted amount on a BA an exporter receives is $1.1m, the amount the exporter receives if they hold to maturity is $1.2m and the face value is $1.3m on a 180 days Bankers Acceptance.

i) Determine the bond equivalent yield the importers bank will earn from discounting the B/A with the exporter. Answer as a decimal to 4 decimal places. (2 Marks)

Answer: Answer

ii) Determine the bond equivalent yield the exporter receives from discounting the B/A. Answer as a decimal to 4 decimal places. (2 Marks)

Answer: Answer

d) From the list below, choose the method an importer is most likely to prefer to undertake trade finance.

Answer