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With reference to Escrow Account, recently seen in the news, consider the following statements:
1. It provides security against scams and frauds.
2. The party receiving the money can make withdrawals from this account without the fulfilment of set obligations.
2. The party receiving the money can make withdrawals from this account without the fulfilment of set obligations.
Select the correct Answer: using the codes given below:
- a)1 only
- b)2 only
- c)Both 1 and 2
- d)Neither 1 nor 2
Correct answer is option 'A'. Can you explain this answer?
Most Upvoted Answer
With reference to Escrow Account, recently seen in the news, consider ...
Escrow Account
An escrow account is a type of financial arrangement where a third party holds and regulates payment of the funds required for two parties involved in a given transaction. It provides security and ensures that the transaction is carried out smoothly.
Statement 1: It provides security against scams and frauds.
The first statement is correct. An escrow account provides security against scams and frauds by acting as a neutral intermediary. The funds are held by the escrow agent until all the terms and conditions of the transaction are met. This ensures that both parties are protected and reduces the risk of fraudulent activities. The escrow agent acts as a trusted third party, ensuring that the funds are only released when the agreed-upon conditions are fulfilled.
Statement 2: The party receiving the money can make withdrawals from this account without the fulfillment of set obligations.
The second statement is incorrect. The party receiving the money cannot make withdrawals from the escrow account without the fulfillment of set obligations. The purpose of the escrow account is to ensure that all parties involved in the transaction fulfill their obligations before the funds are released. This means that the receiving party must meet the agreed-upon conditions before they can access the funds held in the escrow account. The escrow agent acts as a gatekeeper, ensuring that the funds are released only when the necessary obligations are fulfilled.
Conclusion
In conclusion, the correct answer is option A - only statement 1 is correct. An escrow account provides security against scams and frauds by acting as a neutral intermediary. The party receiving the money cannot make withdrawals from the escrow account without fulfilling the set obligations.
An escrow account is a type of financial arrangement where a third party holds and regulates payment of the funds required for two parties involved in a given transaction. It provides security and ensures that the transaction is carried out smoothly.
Statement 1: It provides security against scams and frauds.
The first statement is correct. An escrow account provides security against scams and frauds by acting as a neutral intermediary. The funds are held by the escrow agent until all the terms and conditions of the transaction are met. This ensures that both parties are protected and reduces the risk of fraudulent activities. The escrow agent acts as a trusted third party, ensuring that the funds are only released when the agreed-upon conditions are fulfilled.
Statement 2: The party receiving the money can make withdrawals from this account without the fulfillment of set obligations.
The second statement is incorrect. The party receiving the money cannot make withdrawals from the escrow account without the fulfillment of set obligations. The purpose of the escrow account is to ensure that all parties involved in the transaction fulfill their obligations before the funds are released. This means that the receiving party must meet the agreed-upon conditions before they can access the funds held in the escrow account. The escrow agent acts as a gatekeeper, ensuring that the funds are released only when the necessary obligations are fulfilled.
Conclusion
In conclusion, the correct answer is option A - only statement 1 is correct. An escrow account provides security against scams and frauds by acting as a neutral intermediary. The party receiving the money cannot make withdrawals from the escrow account without fulfilling the set obligations.
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With reference to Escrow Account, recently seen in the news, consider ...
Statement 1 is correct: Escrow Account is a third-party account where funds (also money, securities, funds, and other assets) are kept before they are transferred to the ultimate party. It provides security against scams and frauds especially with high asset value and disputeprone sectors like Real Estate.
Statement 2 is not correct: The party receiving the money can not make withdrawals from an escrow account until the set obligations are fulfilled. However, they have mostly been restricted to large transactions, like mergers and acquisitions, cross-border deals, etc. It reduces risk in specific-use transaction cases like procurement, supply chain, professional services.
Statement 2 is not correct: The party receiving the money can not make withdrawals from an escrow account until the set obligations are fulfilled. However, they have mostly been restricted to large transactions, like mergers and acquisitions, cross-border deals, etc. It reduces risk in specific-use transaction cases like procurement, supply chain, professional services.
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With reference to Escrow Account, recently seen in the news, consider the following statements:1. It provides security against scams and frauds.2. The party receiving the money can make withdrawals from this account without the fulfilment of set obligations.Select the correct Answer: using the codes given below:a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'A'. Can you explain this answer?
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