Mathematics and Statistics · Ch 9 — Commission, Brokerage and Discount
Bills of Exchange — Face Value, Due Date and Days of Grace
Bills of Exchange — Face Value, Due Date and Days of Grace
A bill of exchange is a written, signed order by which one person (the drawer) directs another (the drawee) to pay a stated sum of money after a fixed period. The stated sum written on the bill is its face value (F). The person who holds the bill can wait until it matures, or can take it to a bank earlier and receive cash for it — this is called discounting the bill.
To value a bill we need its maturity date exactly.
Due date, days of grace and legally-due date
- The nominal due date is found by adding the bill's period to its date of drawing (e.g. a 3-month bill drawn on 5 March is nominally due on 5 June).
- By long-standing commercial custom, 3 days of grace are added to the nominal due date. The resulting date is the legally-due date, on which payment is actually demanded.
- The unexpired period used in all discount calculations is the time from the date of discounting up to the legally-due date. …
A signed written order directing a person to pay a fixed sum after a stated period; the stated sum …
The amount written on a bill of exchange, payable on maturity; …
The 3 extra days added by commercial custom to a bill's nominal due date; the resulting date is the legally-due date on whic …
The nominal due date plus 3 days of grace; the unexpired period for discounting is measured …