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Asked Feb 24, 2020
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Assume the 3-month rate on AAA-rated banker’s acceptance is currently trading at 4% p.a. (per annum). A exporter holding a letter of credit (LC) from a AAA-rated bank with a face value of $1,000,000 wishes to sell it in the market. What price can she expect to receive?

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Expert Answer

Letter of credit:

A letter of credit is a letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. I...

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