A short-term debt instrument, which is in the form of a document ordering the drawee (i.e., the debtor) to pay the drawer (the creditor) a stated sum at a specified date, or 'at sight' which means on demand. Once it is accepted, i.e., signed by the drawee (who may be an accepting house or bank) and endorsed, i.e., signed on the back by the acceptor, a bill becomes negotiable and may get discounted, i.e., sold at a discount on its face value, at a rate which reflects current short term rates of interest.
Friday, December 7, 2012
Bill
A short-term debt instrument, which is in the form of a document ordering the drawee (i.e., the debtor) to pay the drawer (the creditor) a stated sum at a specified date, or 'at sight' which means on demand. Once it is accepted, i.e., signed by the drawee (who may be an accepting house or bank) and endorsed, i.e., signed on the back by the acceptor, a bill becomes negotiable and may get discounted, i.e., sold at a discount on its face value, at a rate which reflects current short term rates of interest.
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