[originaltext] Banker’ s acceptances often arise in foreign trade. A busines

Banker’ s acceptances often arise in foreign trade. A business buying goods from abroad where it is not well known and does not have other credit arrangements will first obtain a letter of credit from its own bank. The letter will authorize the foreign seller to draw a draft on the company’ s bank. A draft, or bill of exchange, as it is sometimes called, is a debt instrument. It can be made payable on sight, that is, upon presentation, payable upon arrival of merchandise, or payable in a fixed number of days. A draft can be made payable in, say, 30 days after it is presented to the bank against which it is drawn. This draft can be discounted at the seller’ s bank so that the seller receives immediate payment.
24. What gives rise to the bankers’ acceptance?
25. In how many days can a draft be made payable after it is presented to the bank against which it is drawn?
26. How can the seller receive immediate payment if the draft is made payable on a future date?