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. Two Name Paper

    A nickname assigned to trade paper. Both Trade Acceptances and ...
  5. Bank Draft

    A type of check where the payment is guaranteed to be available ...
  6. Demand Draft

    A method used by individuals to make transfer payments from one ...
Related Articles
  1. Personal Finance

    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. Investing

    GAAP

    Learn more about the generally accepted accounting principles, standards and procedures that companies use to compile their financial statements.
  3. Personal Finance

    Which Business Schools Are the Most Selective?

    Standing out in a sea of exceptionally qualified applicants can be tricky. Here are a few tips on applying.
  4. 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.
  5. 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.
  6. Trading

    Why U.S. Dollars Are Accepted in Bermuda

    The island's proximity to the United States, its popularity with U.S. tourists and the presence of multinational companies contribute to making the U.S. dollar the preferred currency in Bermuda. ...
  7. Investing

    The Money Market

    The money market provides a relatively stable place to park capital that may be needed within a short time horizon.
  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. Trading

    Getting Through The Rough Patches In Trading

    Learn how to recognize and adapt to tough times in the markets.
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. 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 >>
  5. 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. Free Cash Flow - FCF

    A measure of financial performance calculated as operating cash flow minus capital expenditures. Free cash flow (FCF) represents ...
  2. Leverage Ratio

    Any ratio used to calculate the financial leverage of a company to get an idea of the company's methods of financing or to ...
  3. Two And Twenty

    A type of compensation structure that hedge fund managers typically employ in which part of compensation is performance based. ...
  4. Market Capitalization

    The total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying ...
  5. Expense Ratio

    A measure of what it costs an investment company to operate a mutual fund. An expense ratio is determined through an annual ...
  6. Mezzanine Financing

    A hybrid of debt and equity financing that is typically used to finance the expansion of existing companies. Mezzanine financing ...
Trading Center