Describe the role of the drawer in a bank accepted bill

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Question - Nelsons Limited has issued a bank-accepted bill to fund a short-term investment project. The bill is issued for 180 days, with a face value of $100,000 and a yield of 5.75% p.a. The bill was purchased by Arial Ltd and after 45 days it is sold into the money market, at which time market yields have fallen to 4.25%.

Required -

1. Describe the role of the 'drawer' in a bank accepted bill.

2. Calculate the amount Nelsons Limited would have raised upon the issue of the bill.

3. Calculate the amount Arial Ltd would have sold the bill for.

Reference no: EM133157737

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