GENERAL KNOWLEDGE

WHEN A BILL IS NEGOTIATED TO A BANK, IT IS SAID BE

  • A. surrendered
  • B. cashed
  • C. discounted ✓
  • D. accepted

 

The answer to the question is: C. discounted

When a bill is negotiated to a bank, it is said to be “discounted.” This process involves the bank purchasing the bill at a price less than its face value, providing immediate cash to the holder of the bill. The bank then collects the full amount from the debtor when the bill matures. This practice allows the holder of the bill to access funds before the due date and provides liquidity.

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