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Negotiable Instruments Knowledge
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Promissory Note
A written promise to pay a definite sum of money to a specific person either on demand or at a future specified date.
Certificate of Deposit (CD)
A document issued by a bank acknowledging a deposit of money and a promise to repay the depositor, together with interest, at a future date.
Draft
A written order by one party (drawer) to another party (drawee) to pay money to a third party (payee).
Check
A special form of draft that is a written order to a bank to pay a specified sum from the drawer's account to the bearer or a named party.
Banker's Acceptance
A promised future payment, or time draft, which is accepted and guaranteed by a bank and drawn on a deposit.
Commercial Paper
An unsecured, short-term debt instrument issued by a corporation, with a fixed maturity of up to 270 days.
Treasury Bill (T-Bill)
A short-term government debt obligation backed by the Treasury Department with a maturity of one year or less.
Bearer Instrument
A type of negotiable instrument that is payable to whoever holds the instrument, rather than a named payee.
Order Paper
A negotiable instrument that is payable to a specific person or entity, whose name is written on the instrument.
Traveler's Check
A preprinted, fixed-amount check designed to allow the person signing it to make an unconditional payment to someone else as a result of having paid the issuer for that privilege.
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