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The process of earning money is getting hard with
the day but losing them is very easy. So to have a
secured future you need to be very careful in your
investing.
But fortunately now various banks and financial
companies provide best possible ways to monetize
your investment so that you and your family have a
secured financial future.
And the best way to monetize your investment is
use the various bank instruments provide by a top
level bank and financial company.
Before you use bank instruments first
understanding it is very convenient.
By definition bank instruments are asset
backed notes which are issued by a bank to an
investor and it mature over 5-10 years and until
it matures at its pre-defined value they collect
an interest annually.
Financial companies and banks create these
paper notes and they sell it to investors with a
certain annual interest and maturity value
guaranteed.
This allows the investors to gain expected profit and
bank gain immediate cash to meet capital
requirements for additional financing opportunities.
SBLC, LTN, MTN, BG, SKR, POF, KTT etc are
some bank instruments and you can gain benefit
from both purchased own or lease bank
instruments.
There are several steps before a bank instrument
matured and they are given below:
When an investor cleared through compliance then
the issuing bank create an instrument and named
the investor as the sole beneficiary of it.
The instrument contains predefined interest rate
and a value on the date of its maturity and
depending on their relationships and the
instrument’s size the buyer pay a discounted rate
to the issuing bank.
The investor can collect the interest and exercise
the value upon maturity by holding the note till the
end.
But in case if the buyer is a trader then they will to
sell the note at a higher price to a pre-defined “exit
buyer”.
After the first purchaser has purchased the note
they will sell it to another one at a higher price.
This type of middle man activity is normal and
they usually are high net worth individuals, large
corporations, hedge funds, etc.
The final middleman that holds the note also repeats
the same process but the type of buyer is different
than the rest.
The final middleman sell the note to institutional
buyer like pension funds, hedge funds, mutual
funds, and other low risk ventures flock for security
and higher yields.
The final buyers who hold the note receive the
difference between the discount they paid against
the face value and also the interest until the time of
its maturity.
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