What are different types of negotiable instruments and what are their characteristics?
Types of Negotiable Instruments
- Personal checks. Personal checks are signed and authorized by someone who deposited money with the bank and specify the amount required to be paid, as well as the name of the bearer of the check (the recipient).
- Traveler’s checks.
- Money order.
- Promissory notes.
- Certificate of Deposit (CD)
What is the most common form of negotiable instrument?
The most common and most complex form of negotiable instrument is the draft, or bill of exchange.
What two basic purposes do negotiable instruments serve?
Negotiable instruments include two main types: an order to pay (encompasses drafts and checks) and promises to pay (promissory notes and CD’s). The instruments can also be classified as demand instruments or time instruments.