Understanding Bankers Acceptance Notes and Cashier's Checks

What is a key characteristic of bankers acceptance notes?

• They are backed by the federal government.

• They are used primarily in domestic trade.

• They are similar to personal loans.

• They are similar to T-bills and used in foreign trade.

In what scenario are bankers acceptance notes typically used?

• When two parties in a domestic trade trust each other.

• When a government wants to issue a bond.

• When two parties in a foreign trade do not trust each other.

• When a bank wants to issue a personal loan.

Why do banks prefer using bankers acceptance notes in international trade?

• Because they are cheaper than other financial instruments.

• Because they are not regulated by any government.

• Because they offer higher interest rates.

• Because banks generally know each other better than individuals across borders.

What is a cashier's check?

• A check guaranteed by the bank and drawn against the bank's own cash reserves.

• A personal check written by an individual.

• A check used only for small transactions.

• A check that is not backed by any financial institution.

In what type of transactions are cashier's checks commonly used?

• In transactions that do not require any guarantee.

• In complex or expensive transactions like buying a home.

• In small, everyday purchases.

• In transactions between two individuals who know each other well.