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Whats is Commercial Paper?

Commercial Paper is an unsecured short-term loan that a highly rated corporation can issue to finance short-term obligations, like accounts receivable or inventory builds.

The high quality paper is typically issued in increments of $100,000 and with a duration of no more than 270 days, which actually makes it a safe investment since the solvency/cash flow of a business is predictable over such a short stretch.

Corporations typically issue commercial paper at discounts to the market rate, given its high quality nature. Institutions and large banks are the biggest buyers of commercial paper.

What is Commodity Paper?
What is Cash and Cash Equivalents?

Keywords: interest rates, debt, commercial paper,