TeachMeFinance.com - explain Finance bill
Finance bill -- A bill of exchange (draft) drawn in connection
with a financial operation, as an issue of stock or bonds ; or a
reorganization or readjustment ; or an underwriting.
The term is often applied to a bill issued as a loan. For example,
a person in New York borrows 50,000 pounds in sterling in
London. The lender in London sends to the borrower in New
York a letter formally authorizing the borrower to draw on the
lender for the amount named. The stipulation is (usually)
made that collateral for the loan (usually stocks or bonds)
shall be attached to (shall accompany) the draft. The stipulation
may be that the collateral shall be deposited in trust in
New York, in which case only a memorandum of the collateral
is attached to the bill. By leaving the collateral in New
York substitution or change in the collateral can be more
readily made than if the collateral is sent to London. Substitution
can, of course, only be made by consent of the lender in
London. The loan might be obtained in Paris, in which case
it would be in francs ; or it might be obtained in Berlin, in
which case it would be in reichsmarks (marks). The bill of
exchange is sold by the borrower the same as any other bill
of exchange to obtain the money represented by it.
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