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Negotiable Instruments

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Banker's Draft

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A check-like instrument issued by a bank, ordering itself to pay a certain amount of money to a specified party.

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Treasury Bond

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A long-term government security with a maturity greater than ten years and offering periodic interest payments.

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Money Order

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A form of negotiable instrument which is prepaid for a specific sum of money; considered to be a safer form of payment than personal checks.

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Negotiation

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A process by which the ownership of a negotiable instrument is transferred to another party, who then has the right to pursue payment.

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Bill of Exchange

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An order from one party to another to pay a third party a fixed amount of money on a certain date or on demand.

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Commercial Paper

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An unsecured promissory note with a fixed maturity of usually 1 to 270 days; typically used by companies to meet short-term financial obligations.

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Treasury Bill (T-Bill)

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A short-term government security with a maturity of up to one year and sold at a discount from face value.

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Promissory Note

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A written promise to pay a certain sum of money at a specific future date or on demand to a specified person or the bearer.

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Municipal Bond

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A debt security issued by a state, municipality, or county to finance capital expenditures; usually exempt from federal taxes and sometimes from state and local taxes.

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Bank Note

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A type of negotiable instrument, which is a promissory note made by a bank and payable to bearer on demand.

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Treasury Note

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A medium-term government security with a fixed interest rate and maturity between one and ten years.

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Repos

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Short for 'Repurchase Agreements', these are short-term loans where securities are sold with an agreement to repurchase them at a higher price at a later date.

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Foreign Bill of Exchange

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A bill of exchange used in international trade where a fixed amount of money is to be paid in a foreign currency.

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Check

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A written order addressed to a bank to pay a specified sum of money from an individual's account to another individual or entity.

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Certificate of Deposit (CD)

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A financial document issued by a bank acknowledging a deposit of money for a specified period of time with a fixed or variable interest rate.

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Bearer Bond

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A fixed-income security that is owned by whoever is holding it, as opposed to having a registered owner.

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Traveler's Check

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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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Demand Draft

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A negotiable instrument similar to a bill of exchange which is issued by a bank demanding payment from another bank or one of its own branches.

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Fixed Deposit Receipt (FDR)

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A financial instrument provided by banks which offers investors a higher rate of interest than a regular savings account until the given maturity date.

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