Kind of like a Treasury bill but with fewer calories, a banker's acceptance is a promise of future payment, where a banker accepts the responsibility of paying a creditor at a later date on behalf of a borrower. The banker takes the risk in case the payer disappears into thin air. They're often used in international trade transactions since they're a safe way to exchange money in the short term.
A banker's acceptance can also be traded at a slight discount to the face value and held until maturity, sort of like a bond.
Related or Semi-related Video
Finance: What is maturity?1 Views
Finance allah shmoop What is maturity and oh yes the
irony asking someone It shmoop to read about maturity but
we'll do our best here So maturity what is it
Well it's just the date when a debt becomes do
You buy a thousand dollar bond with a maturity date
of may thirty one twenty twenty five Also what happens
on may thirty one twenty twenty five Well that's the
date you'll get your grand back and you'll have the
interest for that period as well So if you had
a six percent bond on that last payment may thirty
one twenty twenty five trivia question how much would you
get back Yes ah thousand dollar principle You'd get returned
but you'd also get what What yes the final payment
of thirty bucks right cause bonds pay interest twice a
year six percent sixty dollars a year You get that
thirty bucks back and that'd be the end of it
We love the semester system here it's from up We're
hoping we can age beyond the seventh grade level that
we seemed to live at here pretty soon for said
Up Next
What are Treasury Bills? Like other debt finance platforms, the US government issues its debt in several ways, and has different terms for each. Tr...
What are Face Amount Certificates (FACs)? Face amount certificates are issued using the face amount. The person who buys it receives face value at...
Term to maturity is kind of the life cycle of a bond, but luckily for the bond, it gets to skip puberty.
What is Yield to Maturity? When calculating bond yields, the yield to maturity is the interest rate that an investor would ultimately accumulate if...