Types of Negotiable Instruments

Negotiable instruments play a crucial role in facilitating financial transactions, and several types serve distinct purposes. Checks are widely used for everyday payments, representing written orders instructing a bank to pay a specified sum to the payee. Certificates of deposit (CDs) are time deposits with banks, offering a fixed interest rate over a specified period, providing a secure investment option. Drafts, in the form of written orders, direct one party to pay a sum of money to another, commonly used in commercial transactions. Promissory notes involve a written promise from one party to pay a specific sum to another, either on demand or at a designated future date. These instruments ensure smooth financial exchanges, contributing to the efficiency of economic activities.

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