Consider an importer that issues a promissory note to pay for the imported capital goods over a period of five years. The notes are extended to an exporter who sells them at a discount to a bank. This reflects:
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The exporter discounts the promissory note to the bank, it reflects that the bank will pay the amount to expoter on behalf of the importer, when the exporter discounts from the bank. Afterwards, when the time period of 5 year are over the importer has to pay the amount to the bank as specified in promissory note.
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The exporter discounts the promissory note to the bank it reflects that the bank will pay the amount to expoter on behalf of the importer discounts from the bank. Afterwards when the time period of 5 year are over the importer has to pay the amount to the bank as specified in promissory note.
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