finance help (1 Viewer)

[jessi90]

does anyone know how CD's and bills of exchange work? my question is: how do banks issue these? they dont just give you a certificate with say $1mill payable at maturity right?

 

[darkwolfzx]

have you tried emailing your tutor for help?

 

[z600]

[FONT=&quot]CDsare short-term discount security issued by a bank; and the face value is paid to the holder at maturity. CDs are issued directly into the money market (maturity up at about 180 days). No interest payment on CDs hence the fact that they are sold at a discount.

[/FONT]

[FONT=&quot]Bill of exchange is a short-term money market discount security and face value repayable at maturity. The role of the bank is to provide “acceptance” that is the bank’s name on the bill issued by a third party and accepts liability for the repayment of the bill. (bank charges a fee). The bank could buy the bill from the issues and immediately sell it into the money market.[/FONT]​

 

[08er]

i think the OP is asking WHY would banks choose to issue those

 

[z600]

does anyone know how CD's and bills of exchange work? my question is: how do banks issue these? they dont just give you a certificate with say $1mill payable at maturity right?

Notice the "how"

As to the "why"-CB wants to raise funds through issuing the CDs and BoE. As for where they issue the instruments, it can be the ASX, money, capital, and wholesale....depending on characteristic of the instrument.