Asked by Kevin Wiley Jr. on Jun 30, 2024
Verified
Fertile Farm Corporation and Grain Commodities Inc. enter a contract for a sale of soybeans. Fertile draws a draft unconditionally ordering Grain to pay $75,000 to Fertile's order in ninety days. Grain signs and dates the draft. Before payment is due, Fertile needs cash. The drawer can
A) submit the draft to the drawee for immediate payment.
B) market the contracted-for soybeans to obtain a higher price.
C) accelerate the date for payment on the draft.
D) sell the draft in the commercial money market.
Commercial Money Market
A segment of the financial market where commercial banks and other institutions lend and borrow short-term, high-quality debt securities.
Unconditionally
Without any conditions or limitations; absolutely.
Draft
A preliminary version of a piece of writing or document that is open for discussion, modification, or approval.
- Point out the dissimilarities among types of negotiable instruments and their roles in various transaction scenarios.
Verified Answer
SA
Scott AllisonJul 01, 2024
Final Answer :
D
Explanation :
Selling the draft in the commercial money market is a common practice for obtaining cash before the payment is due on a draft. This process involves selling the financial instrument (the draft) to a third party, often at a discount, to obtain immediate funds.
Learning Objectives
- Point out the dissimilarities among types of negotiable instruments and their roles in various transaction scenarios.