Posted by: IrfanUpdated at : 5:09 AM
Tags: BANK
The bank notes are fixed income securities which were targeted to institutional clients, but that recently they have begun to be marketed...
The bank notes are fixed income securities which were targeted to institutional clients, but that recently they have begun to be marketed among the general public. They have a few deadlines ranging between 3 and 18 months. They work similar to the Treasury bills, only in the notes the guarantor is a transmitter (the Bank in question) private and not public (State). We will see that information is relevant for the bank notes.
Instructions
Instructions
- They involve more risk than deposits for example. The risk of the bank notes is closely related to the issuing bank, since there is no bankruptcy safety net. This is not so in the case of deposits, since we count with the deposit guarantee fund (FGD). Simply, in the case of bankruptcy of the Bank you can lose your money and the State is not liable for your savings. Therefore need to know the rating of the Bank to minimize risks (where to buy the best promissory notes).
- However, the bank notes are a debt of higher quality than subordinate obligations. Thus, bankruptcy they would get paid before holders of ious that the subordinate obligations.
- You can also have difficulties to perform an early termination of a bank note. Not so much with the deposits, that in many cases they have this option in Exchange for interest or a penalty. Notes on the other hand, do not allow to be cancelled early, on the contrary, to have the money you should sell the product in the secondary market, where reigns the law of supply and its value is conditioned to the low demand.
- Ultimately, the bank notes are products that currently have yields similar to deposits, although they have fewer warranty and liquidity. You will have to wait for the evolution of the market to see if they become more interesting products for investors and savers.
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Title : What is a Bank Note
Description : The bank notes are fixed income securities which were targeted to institutional clients, but that recently they have begun to be marketed...
Description : The bank notes are fixed income securities which were targeted to institutional clients, but that recently they have begun to be marketed...