BANKER'S ACCEPTANCE Definition

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BANKER'S ACCEPTANCE (BA) is a money market instrument that is issued in discounted form. A banker's acceptance is created when a bank accepts responsibility for payment of business debt by signing a letter of credit. Banker's acceptances are sold to acceptance dealers and may be resold to numerous other parties before the loan is repaid. The investor who last owns the acceptance when the debt becomes due has a right to collect from the borrower. Should the borrower default, the investor can also pursue payment from the accepting bank.

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VERTICAL INTEGRATION is the extent to which a firm owns its upstream suppliers and its downstream buyers. Control upstream is referred to as backward integration (towards suppliers of raw material), while control of activities downstream (towards the eventual buyer) is referred to as forward integration.

BA see BANKER'S ACCEPTANCE.

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