Acceptance Market

DEFINITION of 'Acceptance Market'

Investment market based on short-term credit instruments. An acceptance is a time draft or bill of exchange that is accepted as payment for goods. A banker's acceptance, for example, is a time draft drawn on and accepted by a bank, which is a common method of financing short-term debts in international trade including import-export transactions.

BREAKING DOWN 'Acceptance Market'

The acceptance market is useful to exporters, who are immediately paid for exports; for importers, who do not need to pay until possession of goods occurs; for the financial institutions, that are able to profit from the acceptances; and for investors who trade acceptances in the secondary market. Acceptances are sold in the secondary market at a discount from face value (similar to the Treasury Bill market), at published acceptance rates.

RELATED TERMS
  1. Acceptance

    A contractual agreement on a time draft or sight draft to pay ...
  2. Time Draft

    A type of foreign check that is guaranteed by the issuing bank, ...
  3. Banker's Acceptance - BA

    A short-term debt instrument issued by a firm that is guaranteed ...
  4. Bankable Funds

    Forms of payment that are accepted at financial institutions. ...
  5. Bank Draft

    A type of check where the payment is guaranteed to be available ...
  6. Two Name Paper

    A nickname assigned to trade paper. Both Trade Acceptances and ...
Related Articles
  1. Investing

    Banker's Acceptance 101

    A banker's acceptance, a common way of financing international trade activity, provides a relatively safe, short-term vehicle for investors. An acceptance is a negotiable time draft that a bank ...
  2. Retirement

    Money Market: Banker's Acceptance

    A bankers' acceptance (BA) is a short-term credit investment created by a non-financial firm and guaranteed by a bank to make payment. Acceptances are traded at discounts from face value in the ...
  3. Markets

    What's a Bank Draft?

    A bank draft is a type of check. The bank guarantees payment, making it a more attractive option for the check recipient.
  4. Personal Finance

    Which Are The Best Credit Cards To Take To China? (DFS)

    Credit cards are now much more widely accepted in China – and one issuer leads the pack, due to its deal with China UnionPay, the Chinese bankcard network.
  5. Insights

    Top 5 US Cities That Accept Bitcoin

    Discover why bitcoins are a popular form of payment among many consumers, and learn the top five cities in the United States that accept this currency.
  6. Trading

    Getting Through The Rough Patches In Trading

    Learn how to recognize and adapt to tough times in the markets.
  7. Investing

    Understanding Short-Term Investments

    These are investments that have a maturity date of less than one year, or will be liquidated within a year.
  8. Investing

    Financial Markets: Capital vs. Money Markets

    Financial instruments with high liquidity and short maturities trade in money markets. Long-term assets trade in the capital markets.
  9. Managing Wealth

    Understanding Risk Averse Investing

    Risk averse describes a low level of risk an investor is willing to accept on his investments. An investor who is risk averse prefers little risk and is willing to accept a lower return because ...
  10. Markets

    Bill of Exchange

    A bill of exchange is a document used in international trade to pay for goods or services. It is signed by the person promising to pay, and given to the person entitled to receive the money. ...
RELATED FAQS
  1. How do I obtain a banker's acceptance?

    Find out how to obtain a banker's acceptance, why you should treat it like a short-term loan and when you would most likely ... Read Answer >>
  2. Why is marketing important to a company in the utilities sector?

    Find out what a banker's acceptance is, how it works, and why it should be considered a safe and liquid money market instrument. Read Answer >>
  3. What is the Activities of Daily Living (ADL) hierarchy scale?

    Find out how a banker's acceptance is different than a post-dated check, even though both instruments represent a claim against ... Read Answer >>
  4. How can I look up average banker's acceptance yields?

    Discover what a banker's acceptance note is, how it is commonly used, and where investors can find information on available ... Read Answer >>
  5. Why do long-term care insurers require the loss of two Activities of Daily Living ...

    Find out why an importing or exporting merchant might turn to a banker's acceptance to help facilitate an international trade ... Read Answer >>
  6. How can I cancel a bank draft that I have purchased?

    Learn about what a bank draft is and how it works, the circumstances under which a bank draft may be cancelled, and what ... Read Answer >>
Hot Definitions
  1. Bond Ladder

    A portfolio of fixed-income securities in which each security has a significantly different maturity date. The purpose of ...
  2. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  3. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  4. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  5. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  6. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
Trading Center