Promissory note

1. What is meant by promissory note?
2. What is the example of promissory note?
3. Who issues the promissory note?
4. How does a promissory note work?

What is meant by promissory note?

A promissory note is a financial instrument that contains a written promise by one party (the note's issuer or maker) to pay another party (the note's payee) a definite sum of money, either on demand or at a specified future date.

What is the example of promissory note?

A simple promissory note might be for a lump sum repayment on a certain date. For example, you lend your friend $1,000 and he agrees to repay you by December 1. The full amount is due on that date, and there is no payment schedule involved.

Who issues the promissory note?

Promissory notes are debt instruments. They can be issued by financial institutions. The capital markets consist of two types of markets: primary and secondary.

How does a promissory note work?

Promissory note is a written promise to pay a debt. It is a financial instrument, in which one party (maker or issuer) promises in writing to pay a determinate sum of money to the other (the payee), either at a fixed, determinable future time or on demand of the payee subject to specific terms.