Commercial paper

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Commercial paper

Short-term promissory notes either unsecured or backed by assets such as loans or mortgages issued by a corporation. The maturity of commercial paper is typically less than 270 days; the most common maturity range is 30 to 50 days or less.

Commercial Paper

An unsecured, short-term debt security issued by a corporation. Commercial paper is usually issued at a discount from par, and is a popular investment with mutual funds. It usually is issued in large denominations (over $250,000) and has a maturity of less than 270 days, with most maturing within one or two months of issue. It is a highly liquid investment and forms part of the money market. It is often simply called paper.

commercial paper

A short-term unsecured promissory note issued by a finance company or a relatively large industrial firm. The notes are generally sold at a discount from face value with maturities ranging from 30 to 270 days. Although the large denominations ($25,000 minimum) of these notes usually keep individual investors out of this market, the notes are popular investments for money market mutual funds. Used interchangeably with the term paper. See also prime paper.

Commercial paper.

To help meet their immediate needs for cash, banks and corporations sometimes issue unsecured, short-term debt instruments known as commercial paper.

Commercial paper usually matures within a year and is an important part of what's known as the money market.

It can be a good place for investors -- institutional investors in particular -- to put their cash temporarily. That's because these investments are liquid and essentially risk-free, since they are typically issued by profitable, long-established, and highly regarded corporations.

References in periodicals archive ?
Whether bonds, notes and short-term paper should be classified as fixed-rate loans is debatable, but the majority of these loans are usually extended with a fixed coupon rate.
This limits exposure to the risk that an issuer of short-term paper might default.
Turnover in the outright secondary market for short-term paper was 9% lower than in the previous year, although turnover for short-term paper issued by credit institutions increased by 12%.
Cabot will use proceeds from the offering to refinance a portion of short-term paper it currently holds with various banks.
697 percent at auction on Thursday, as large redemptions and lower rates on overnight deposits at the ECB supported demand for short-term paper.
Short-term paper has spent another week largely unmoved.
One effect of the shrinkage in the LOC market was the substantial increase in the growth of derivative products in response to issuer demand for short-term paper.
The rise in yields, however, has a limited impact upon schemes that invest in short-term papers.

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