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Question
How is discounting of a bill of exchange a form of bank lending?
Solution
- Discounting a bill of exchange is a type of bank lending in which the bank advances the value of the bill to the holder before its maturity date while deducting a discount fee (interest) for the service.
- When the bill matures, the bank takes the full amount from the drawee, thereby giving the holder a short-term loan.
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Discuss any five advantages of having a bank account.
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Observe the relationship of the first pair of word and complete the second pair.
The primary function of a commercial bank : Acceptance of deposit, the agency function of a commercial banks : ______.
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| Column I | Column II | ||
| A. | Function of Commercial bank | (i) | Initial deposits × `1/"LRR"` |
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| D. | Margin requirement | (iv) | `1/"LRR"` |
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