Question

The amount paid to the holder of the bill after deducting banker's discount is known as ..............

Hint:

The formula is: {Cash Value = Face Value - Banker's Discount}. The Banker's Discount is the bank's fee for giving you the money early.

Answer 1

When a bank discounts a bill of exchange, it calculates the interest on the face value of the bill for the unexpired period. This interest is called the Banker's Discount (B.D.). The bank deducts this amount from the face value and pays the remaining amount to the holder. This net amount received by the holder is known as the Cash Value (C.V.) or the proceeds of the bill.