Negotiable

Negotiable is an adjective that describes something that can be bought or sold, especially through bargaining or discussion. In the financial world, negotiable instruments are documents that can be transferred from one person to another, such as checks, drafts, and promissory notes. These instruments are considered negotiable because they can be used to settle debts or make payments.

There are two types of negotiable instruments: order instruments and bearer instruments. Order instruments are payable to a specific person or company, and they can only be transferred by endorsement. Bearer instruments are payable to the bearer, which means that anyone who holds the instrument can cash it.

Negotiable instruments are important because they allow for the easy transfer of money and goods. They are also used in a variety of financial transactions, such as loans, investments, and trade.

In addition to being negotiable, financial instruments can also be classified as either debt instruments or equity instruments. Debt instruments are obligations to repay a certain amount of money, plus interest, at a specified time. Examples of debt instruments include bonds, notes, and mortgages. Equity instruments represent ownership in a company or other entity. Examples of equity instruments include stocks and mutual funds.

The type of financial instrument used in a transaction will depend on the specific needs of the parties involved. For example, a company that needs to borrow money may issue bonds, while an investor who wants to own a share of a company may buy stocks.

Negotiable instruments are an important part of the financial system. They allow for the easy transfer of money and goods, and they are used in a variety of financial transactions.