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Bank Acceptances
Bank acceptances fall into the category
of money market securities. They are notes that a non-financial company
issues to clients. The principal and interest on this type of investment
are guaranteed by a bank, and the maturities are variable.
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Risk Level |
A bank acceptance is a low-risk security.
Since it is guaranteed by a banking institution, the risk is reduced,
but the issue price is higher. The return is therefore lower. However,
the return is higher than the return on a Treasury
bill.
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