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WAEC Economics 2005 Question 34

Question 34

Financial Institutions

Discounting a bill of exchange means the bill is

  1. A.cashed over the counter
  2. B.sold on the stock exchange
  3. C.bought for less than its face value
  4. D.sold to the highest bidder.
Show the answer and explanation

Answer: C (bought for less than its face value)

Explanation

A discounted bill is bought before it matures for less than its face value; the difference is the discount.