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T.I.P. Q.C.
CREDIT INSTRUMENTS
A document
Evidencing the existence of a credit obligation
Defines the responsibility of the debtor to the
creditor
Right of creditor to collect from the debtor on the
date assigned
BROAD CLASSIFICATIONS
General Acceptability
- widely acceptable
Limited Acceptability
a. Investment purpose - stock
certificates/bond/money market
b. Commercial purpose
-Promise-to-pay or order-
to pay
treasury certificates
* Promissory notes
financial institution
Letters of credit/Open Book
orders
* Checks/drafts and
KINDS OF BONDS
CONCEPTS
Dealer an intermediary or a party to money
market securities
Broker not a party to the transaction; acts as
an agent for his clients who either are buyers or
sellers
Underwriter a dealer who handles new lines of
securities
Transactions in the primary market involve the
issuance of new securities.
Transactions in the secondary market are
confined to already issued and outstanding
securities.
Promise to-pay
Order-to-pay
involves two parties
involves
three parties
*maker or debtor and
*drawer who orders
payment
*payee or creditor
*drawee the party
ordered to pay
*payee is receiver of
payment
Crossed check bears two parallel lines which can not be encashed
Post dated check shows a future date
Stale check is not encashed within a reasonable time.
Managers check/cashier/treasurers check is a check drawn against the
funds of a bank and drawn by a bank official.
Bouncing or rubber check is a check without sufficient funds
Counter check is used by a depositor who has forgotten his check or
close a checking account.
Certified check depositors own check certified by bank.
Falsified or forged check which has been deliberately imitated.
Personal/Commercial check is used for personal expenses
Cancelled check is a check cancelled due to mistakes.
Returned check for various reasons like figure is different from amount,
wrong date
GIRO SYSTEM