Key Terms Chapter 11 Promissory Note, Simple Discount Notes, and The Discount Process

Question	Answer
Bank Discount	The amount of interest charged by a bank on a note MVxBDRxT
Bank Discount Rate	Percent on interest charged by the bank
Contingent Liability	Potential liability that may or may not result from discounting a note
Discount Period	Amount of time to take advantage of a cash discount
Discounting a Note	Receiving cash from selling a note to a bank before the due date of a note
Effective Rate	True rate of interest. The more frequent the compounding, the higher the effective rate
Face Value	Amount of money borrowed (AKA the Principal)
Interest-Bearing Note	Maturity value of the note is greater than amount borrowed since interest is added on
Maker	The company issuing the note and borrowing the money
Maturity Date	The date the principal and interest are due
Maturity Value (MV)	The date the
Non-Interest Bearing Note	Note where the maturity value will be equal to the amount of money borrowed since no additional interest was charged
Payee	The company extending the credit
Proceeds	MV-Bank Charge
Promissory Note	Written unconditional promise to pay a certain sum (with or without interest) at a fixed time in the future
Simple Discount Note	A note in which bank deducts interest in advance
Treasury Bill	Loan to the federal government for 91 days(13weeks), 182 days(26 weeks) or 1 year

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	Created by Kyra Louthan about 1 month ago