Question

In: Finance

An instrument for which a bank temporarily sells for liquidity a segment (amount) of its Treasury...

An instrument for which a bank temporarily sells for liquidity a segment (amount) of its Treasury securities with the expectation of buying them back is a(n): a. repurchase agreement b. negotiated CD (NCD) c. banker’s acceptance d. commercial paper

An instrument for which a bank guarantees payment on a post-dated three-party check usually used for international trade is a(n): a. repurchase agreement b. negotiated CD (NCD) c. banker’s acceptance d. commercial paper

Expert Solution

Answer to 1st question

Answer:(a)Repurchase Agreement

A repurchase agreement is an instrument where a bank sells securities to gain liquidity with the guarantee to buy them back in a later date at a set price.A repurchase agreement maybe for a year or for a day.

other options explained

Negotiated certificate of deposit

False.Refers to the certificate issued by banks to investors upon making lump sum deposits.Such a certificate of deposit issued to an investor for deposits with minimum face value of $100,000 is called a Negotiable CD

Bankers Acceptance

False.A bankers acceptance refers to an instrument in which the bank guarantees payment and is often used in international trade.

Commercial paper

False.Commercial paper is used by firms to raise funds in the short run,they are unsecured(without collateral)

answer to Question 2

Answer:(C)Banker's Acceptance

Bankers Acceptance also known as bill of exchange refers to an instrument in which the bank guarantees payment, and is often used in international trade deals.

Other options explained

Repurchase Agreement

False.A repurchase agreement is an instrument where a bank sells securities to gain liquidity with the guarantee to buy them back in a later date at a set price.A repurchase agreement maybe for a year or for a day.

Negotiated CD

False.Refers to the certificate issued by banks to investors upon making lump sum deposits.Such a certificate of deposit issued to an investor for deposits with minimum face value of $100,000 is called a Negotiable CD

Commercial paper

False.Commercial paper is used by firms to raise funds in the short run , they are unsecured(without collateral)

jeff jeffy answered 2 years ago

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