Answer (D) is correct . Banker’s acceptances are time drafts drawn on deposits in a bank. They are short-term credit investments created by a nonfinancial firm and guaranteed (accepted) by a bank as to payment. Acceptances are traded at discounts in secondary markets. These instruments have been a popular investment for money market funds.
Answer (A) is incorrect because A banker’s acceptance is a time draft.
Answer (B) is incorrect because A banker’s acceptance is created by a nonfinancial firm.
Answer (C) is incorrect because A banker’s acceptance is sold at a discount in a secondary market.
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