Should he discount or hold the b/a to maturity

Reference no: EM13302595

The time from acceptance to maturity on a $1000000 bankers acceptance is 120days. the importer's bank's acceptance commission is 1.75% and the market rate for 120day B/A is 5.75%.Determine the following:

1. proceeds the exporter will receive if he holds B/A till maturity
2. acceptance commission paid by the importes bank
3. proceeds the exporter receives if he discounts the B/A
4.1 the interest rate the bank receives 4.2 the bond equivalent yield the importes bank will earn from discounting the B/A with exporter
5. if the exporter's oppurtunity cost of capital is 10%, should he discount or hold the B/A to maturity?

Reference no: EM13302595

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