CORPORATE FINANCE (LL+CONNECT)
12th Edition
ISBN: 9781266427404
Author: Ross
Publisher: MCG CUSTOM
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Question
Chapter 28, Problem 1CQ
a.
Summary Introduction
To explain: Sight draft
Credit Instruments:
These are the documents or instruments used in replacement of currency. They are widely accepted nowadays. It is of many types.
a.
Expert Solution
Answer to Problem 1CQ
Sight draft
- It is a type of bill of exchange which is payable immediately.
- It is used in international trade.
Explanation of Solution
- In this bill of exchange, payment cannot be delayed after presenting the draft.
- It is payable as soon as the seller shows the draft to buyer.
- There is no specific date of its maturity.
Conclusion
Sight draft is a type of bill of exchange which is payable immediately.
b.
Summary Introduction
To explain: Time draft
b.
Expert Solution
Answer to Problem 1CQ
Time draft
- It is a type of bill of exchange.
- It is payable after a definite period of time or after happening of a particular situation.
Explanation of Solution
- It is a promise to pay in future.
- It is used with acceptance.
- It is generally used in international trade.
Conclusion
Time draft is payable after a definite period of time
c.
Summary Introduction
To explain: Banker’s acceptance
c.
Expert Solution
Answer to Problem 1CQ
Bankers acceptance
- It is a type of bill of exchange.
- It is a short-term instrument.
Explanation of Solution
- It is a bill of exchange instrument, which is guaranteed by bank.
- It is a safe instrument.
Conclusion
Bankers acceptance is guaranteed by bank.
d.
Summary Introduction
To explain: Promissory Note
d.
Expert Solution
Answer to Problem 1CQ
Promissory Note
- It is a type of financial instrument.
- The maker signs it.
Explanation of Solution
- In this note one party signs and promises to pay in writing a certain amount of money to the other party.
- It is paid in future or under a particular situation.
- The one who signs and writes the note is the maker and other party is payee.
Conclusion
Promissory Note is the one in which one party signs and promises to pay in writing a certain amount of money to the other party.
e.
Summary Introduction
To explain: Trade acceptance
e.
Expert Solution
Answer to Problem 1CQ
Trade acceptance
- It is a type of bill of exchange.
- In this instrument the bank is not involved.
Explanation of Solution
- Purchaser on purchase of goods and services directly accepts this note.
- It is due at future time period.
- It is drawn by the purchaser for purchase of goods.
- Drawer for sale of goods draws it.
Conclusion
The purchaser on purchase of goods and services directly accepts trade acceptance.
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Chapter 28 Solutions
CORPORATE FINANCE (LL+CONNECT)
Ch. 28 - Prob. 1CQCh. 28 - Trade Credit forms In what form is trade credit...Ch. 28 - Prob. 3CQCh. 28 - Five Cs or Credit What arc the five Cs of credit?...Ch. 28 - Credit Period Length What are some of the factors...Ch. 28 - Credit Period Length In each of the following...Ch. 28 - Inventory Types What are the different inventory...Ch. 28 - Just-in-Time Inventory If a company moves to a JIT...Ch. 28 - Inventory Costs If a companys inventory carrying...Ch. 28 - Inventory Period At least part of Dells corporate...
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