credit instruments power point
TRANSCRIPT
![Page 1: Credit Instruments Power Point](https://reader033.vdocuments.us/reader033/viewer/2022061304/54ffad304a7959b9108b483c/html5/thumbnails/1.jpg)
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A credit instrument is a term used in the banking and finance world to describe any item agreed upon that can be used as currency.
Items that are utilized in the place of currency.
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Credit Instruments widely acceptable without questioning the integrity of the person offering it.
The only credit instrument that meets the qualification of general acceptability is credit money.
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Bank Notes or Paper Money Issued by the central bank
Treasury Certificates a short-term obligation of the treasury,
usually maturing in one year, paying interest periodically on a coupon basis: no longer issued publicly
Bank Notes or Paper Money Issued by the central bank
Treasury Certificates a short-term obligation of the treasury,
usually maturing in one year, paying interest periodically on a coupon basis: no longer issued publicly
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Credit instruments that are accepted only by few people and may be subdivided into two types:
Credit instrument for INVESTMENT PURPOSES
Credit instrument for COMMERCIAL PURPOSES
Credit instruments that are accepted only by few people and may be subdivided into two types:
Credit instrument for INVESTMENT PURPOSES
Credit instrument for COMMERCIAL PURPOSES
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Credit Instruments for Investment Purposes are subdivided into stock certificates, bond certificates, and money market bills.
Stock Certificates▪ Evidences of ownership in a corporation
Bond Certificates▪ Issued by a government or corporation in order to raise
money Monkey Market Bills▪ Negotiable financial instruments bought and sold in
the market
Credit Instruments for Investment Purposes are subdivided into stock certificates, bond certificates, and money market bills.
Stock Certificates▪ Evidences of ownership in a corporation
Bond Certificates▪ Issued by a government or corporation in order to raise
money Monkey Market Bills▪ Negotiable financial instruments bought and sold in
the market
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Subdivisions: Promise-to-pay▪ A promise-to-pay instrument involves two parties:▪ The Maker (Debtor)▪ The Payee (Creditor)
Order-to-pay▪ An order-to-pay instrument involves three parties:▪ The Drawer - party who orders payment▪ The Drawee - party ordered to pay▪ The Payee - receiver of the payment
Subdivisions: Promise-to-pay▪ A promise-to-pay instrument involves two parties:▪ The Maker (Debtor)▪ The Payee (Creditor)
Order-to-pay▪ An order-to-pay instrument involves three parties:▪ The Drawer - party who orders payment▪ The Drawee - party ordered to pay▪ The Payee - receiver of the payment
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Promissory NoteFinancial Institution DepositsLetter of CreditOpen Book Accounts
Promissory NoteFinancial Institution DepositsLetter of CreditOpen Book Accounts
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Checks▪ A document/instrument that orders a
payment of money from a bank account.Drafts / Bill of Exchange
▪ An unconditional order made by the drawer requesting the drawee to pay the payee.
Money Orders▪ Bank money order – order of one bank to
another bank to pay a person on demand.▪ Postal money order – an order of a post office
to another post office to pay a person on demand.
Checks▪ A document/instrument that orders a
payment of money from a bank account.Drafts / Bill of Exchange
▪ An unconditional order made by the drawer requesting the drawee to pay the payee.
Money Orders▪ Bank money order – order of one bank to
another bank to pay a person on demand.▪ Postal money order – an order of a post office
to another post office to pay a person on demand.
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