1. Money Market: Introduction
  2. Money Market: What Is It?
  3. Money Market: Treasury Bills (T-Bills)
  4. Money Market: Certificate Of Deposit (CD)
  5. Money Market: Commercial Paper
  6. Money Market: Banker's Acceptance
  7. Money Market: Eurodollars
  8. Money Market: Repos
  9. Money Market: Conclusion

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 secondary market.

For corporations, a BA acts as a negotiable time draft for financing imports, exports or other transactions in goods. This is especially useful when the creditworthiness of a foreign trade partner is unknown.

Acceptances sell at a discount from the face value:

Face Value of Banker\'s Acceptance $1,000,000
Minus 2% Per Annum Commission for One Year -$20,000
Amount Received by Exporter in One Year $980,000

One advantage of a banker's acceptance is that it does not need to be held until maturity, and can be sold off in the secondary markets where investors and institutions constantly trade BAs.

Money Market: Eurodollars

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

    Explaining Banker's Acceptances

    A banker’s acceptance (BA) is a way for two unfamiliar parties to transact business on credit.
  3. Personal Finance

    What Do Investment Bankers Really Do?

    Investment bankers are essentially corporate financial advisors and can help companies manage the process of raising financing for their activities.
  4. Personal Finance

    Personal Banker: Job Description & Average Salary

    Discover the job duties and typical salary of a personal banker, and identify the education and skill set needed to be successful in the field.
  5. Investing

    BA, Japan Airlines Extend Parts Contract (BA)

    Boeing Co. has announced a 10-year spare parts solutions contract extension with Japan Airlines.
  6. Personal Finance

    Is a Career in Investment Banking Worth It?

    Discover why many finance professionals are wondering whether an investment banking career is worth it. Consider the challenges of this profession.
  7. Personal Finance

    Investment Banker: Job Description & Average Salary

    Identify what investment bankers do in a typical work day, learn what skills are needed to be successful and understand how investment bankers get paid.
  8. Personal Finance

    What Does an Investment Banker Do?

    An investment banker works for a financial institution that helps companies, governments and agencies raise money by issuing securities.
  9. Investing

    BA to Supply ZNH with Dreamliner Planes (BA, ZNH)

    Boeing Co (BA) will supply China Southern Air SHS (ZNH) with Dreamliner planes valued at $3.2 billion in list prices.
  10. Investing

    Boeing, Qatar Airways Finalize Pact (BA)

    Boeing Co. (BA) will supply Qatar Airways with 30 787-9 Dreamliners and 10 777-300ERs.
Frequently Asked Questions
  1. Depreciation Can Shield Taxes, Bolster Cash Flow

    Depreciation can be used as a tax-deductible expense to reduce tax costs, bolstering cash flow
  2. What schools did Warren Buffett attend on his way to getting his science and economics degrees?

    Learn how Warren Buffett became so successful through his attendance at multiple prestigious schools and his real-world experiences.
  3. How many attempts at each CFA exam is a candidate permitted?

    The CFA Institute allows an individual an unlimited amount of attempts at each examination.Although you can attempt the examination ...
  4. What's the average salary of a market research analyst?

    Learn about average stock market analyst salaries in the U.S. and different factors that affect salaries and overall levels ...
Trading Center