3. Promissory Notes. 4. Certificates of Deposit

3. Promissory Notes

A promissory note is an unconditional written promise by one person to pay to the order of another person or to the bearer a certain sum of money on demand or at a definite time

Promissory notes initially involve only two parties — the maker and the payee. The maker is the one who executes or makes a promissory note (or a certificate of deposit) and promises to pay. The payee. If two or more parties join in executing the note, they are comakers and are equally liable for payment.

4. Certificates of Deposit

A certificate of deposit is a written acknowledgment by a bank of receipt of money, with an unconditional promise to repay it. The stated amount is payable with interest at a definite future time, normally ranging from several months to several years. A certificate of deposit is often called a CD.

Banks do not pay out CD's or other long-term deposits before maturity. Usually the penalty is a sharp reduction in the amount of interest payable on the funds. Interest rates on CD's are usually significantly higher than on savings or chequeing accounts.

1. Answer the questions:

1. What is a draft? What is another name of a draft?

2. What does the word unconditional mean?

3. What is the aim of a draft?

4. Who is a drawer?

5. Who is a drawee?

6. What is a time draft?

7. What is the acceptance?

8. What are cheques usually written on?

9. What does it mean to honour the cheque?

10. Who bears the loss when a cheque was stolen and no stop payment order was made?

2. Make up your own 10 sentences with the help of the words and phrases from the vocabulary/

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