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A bankers' acceptance, or BA, is a time draft drawn on and accepted by a bank.
Before acceptance, the draft is not an obligation of the bank; it is merely an order by the drawer to the bank to pay a specified sum of money on a specified date to a named person or to the bearer of the draft. Upon acceptance, which occurs when an authorized bank accepts and signs it, the draft becomes a primary and unconditional liability of the bank. If the bank is well known and enjoys a good reputation, the accepted draft may be readily sold in an active market.
A bankers acceptance is also a money market instrument ; a short-term discount instrument that usually arises in the course of international trade.
This article uses material from Wikipedia and is licensed under the GNU Free Documentation License
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