Script for CMCP Reporting:

Credit Instruments with Limited Acceptability:

 Just like what Ms. Baja said, Credit instruments with limited acceptance are ones
that are only accepted by a small number of persons. Typically, these
instruments are issued under stipulations that limit their acceptability as a
form of payment to a certain area.

Difference between IC and CI:

 One difference between Investment credit and commercial credit is that

Commercial Credit is paid back or liquidated through the exchange of already
existing goods or goods that are about to become consumable. Investment
Credit, on the other hand, can be paid back or liquidated through the savings
made from increasing productive power.
 With commercial credit, the typical business is one that brings together
consumers and producers. On the other hand, the typical business of an
investment institution is to bring together producers and people who want to
make money instead of using their capital right away.

UNDER THE INVESTMENT CREDIT INSTRUMENTS ARE BOND CERTIFICATE,

STOCK CERTIFICATE AND MONEY MARKET BILLS.

Bond Certificate:

 It is not necessary for the issuer to send bond certificates to investors when
a bond is registered, since this means that the company is maintaining an
internal record of who owns each bond.
 If bonds are designated as ‘bearer bonds’, then whoever has possession of the
related bond certificates can demand principal and interest payments from
the issuer on the dates stated on the certificates. Thus, it is necessary for
investors to maintain tight control over their bearer bond certificates.
 Contains the name of the issuer, amount to be paid back to the investor
(known as the face amount), date of repayment, rate of interest to be paid on
the borrowed funds, and unique certificate identification number.

Stock Certificate:

 These are evidences of ownership in a corporation.

 In the past, stock transactions were conducted only over the phone or in
person, with no participation from automated trading systems or the internet. An
 Example is, when you'd just give your broker a call and instruct him to purchase
100 shares of XYZ Company.
 After a stock purchase transaction was finalized, you would get a stock certificate
and pay a hefty trading fee. Certificates of stock ownership were physical papers
issued by corporations to its stockholders.
 Among the crucial details given on these certificates were:
o Name of Shareholder
o Purchase Date:
o Count of Owned Shares
o Holdings' Stock Type
o A CUSIP is a special number that may be used to track down a
specific purchase.
o The authorized signatory's signature on the share certificate.
 Common Stock:
o Common stock is a type of investment that shows ownership in a
company. People who own common stock have the rights vote for the
board of directors and decide how the company will run.
o Most of the time, this type of equity ownership gives higher rates of
return over time. In the case of liquidation, however, common
shareholders can only claim a company's assets after bondholders,
preferred shareholders, and other creditors that have been paid in
full.
 Preferred Stock:
o Preferred stock is a kind of equity that grants ownership in a
corporation and preferential access to earnings.
o However, preferred stockholders often have no or restricted voting
rights in corporate governance, but they have a larger claim on
distributions (such as dividends) than common stockholders.

Money Market Bills:

 These are unsecured debt contracts with a fixed rate of return. Theoretically,
they are riskier because of the fixed rate of return. But they have a high
credit rating, which means that the people who make them don't miss
payments.
 Money market instruments are used by businesses, banks, and governments
to meet their large but short-term needs for capital.
 Money Market:
o A meeting place for users and suppliers of short-term funds.
 o It lets governments, banks, and other large institutions sell short-
term securities to get the cash flow they need in the short term.
 Treasury Bills:
o Since they are backed by the full faith and credit of the U.S. government,
they are thought to be the safest instruments.
o They are good for one, three, six, or twelve months.
 Certificate of Deposit (CD)
o Most CDs have a fixed maturity date and interest rate, and if you take
money out before the maturity date, you have to pay a penalty.
o Just like a bank’s checking account, a certificate of deposit is insured
by the Federal Deposit Insurance Corporation (FDIC).
 Commercial Paper:
o Commercial paper requires the repayment of a certain sum of money
by a specified deadline. The maturation times range from one to 270
days. The average duration is 30 days.
o Typically, commercial paper is issued at a discount to face value. It
reflects market-prevailing interest rates.
 Banker’s Acceptance:
o Since the holder of the acceptance may decide to sell it on a
secondary market, and investors can profit from the short-term
investment. The maturity date usually lies between one month and six
months from the issuing date.
 Repurchase Agreement (Repo):
o Most people think of repurchase agreements as safe investments
because the security in question acts as collateral. This is why U.S.
Treasury bonds are used in most repurchase agreements.
o A repurchase agreement is a money-market instrument that works like
a short-term, collateral-backed, interest-bearing loan. The buyer acts
as a short-term lender, and the seller acts as a short-term borrower.
o The collateral is the securities that are being sold. So, the goals of
both sides, which were to get secured funding and cash, are met.

Summary:

 Credit instruments with limited acceptance are ones that are only accepted by a
small number of persons. Typically, these instruments are issued under
stipulations that limit their acceptability as a form of payment to a certain area.
 Under the Investment Credit Instruments are:
 o Bond Certificate is a document that states the details of the bond including
the bond issuer’s name, the bond par value or face amount, the interest
rate, and the maturity date.
o Stock Certificates are physical paper which is considered evidence of
ownership in a corporation. And under it where Preferred Stocks and
Common Stocks.
o Money Market Bills are instruments which are used by businesses, banks,
and governments to meet their large but short-term needs for capital. It
includes Treasury Bills, Certificate of Deposit (CD), Commercial Paper,
Banker’s Acceptance, and Repurchase Agreement (Repo).

1. This kind of Stock have higher larger claims on the distribution.

A. Common Stock
B. Domestic Stock
C. Growth Stock
D. Preferred Stock (answer)

2. A money market instrument where in if you take money out before the
maturity date, you have to pay a penalty.
A. Repurchase Agreement
B. Certificate of Deposit (answer)
C. Treasury Bills
D. Banker’s Acceptance

3. Most people think of this instrument as safe investments because the security
in question acts as collateral.
A. Stock Certificate
B. Treasury Bills
C. Repurchase Agreement (answer)
D. Commercial Paper

4. Usually, this money market bill reflects the market-prevailing interest rates.
A. Treasury Bills
B. Commercial Paper (answer)
C. Banker’s Acceptance
D. Certificate of Deposit

5. People who own this have the right to vote for the board of directors and
decide how the company will run.
A. Common Stock (answer)
B. Banker’s Acceptance
C. Commercial Paper
D. Certificate of Deposit

6. These instruments are ones that are only accepted by a small number of
persons.
A. Credit Instruments with Limited Acceptability (Answer)
B. Investment Credit Instruments
C. Credit Instrument with General Acceptability
D. Commercial Credit Instruments

7. These are thought to be the safest instruments, since they are backed by the
full faith and credit of the U.S. government.
A. Certificate of Deposit
B. Commercial Paper
C. Treasury Bills (answer)
D. Common Stock