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Why is commercial paper known as short term paper?
Commercial paper is also known as short-term paper because of the brief length of its term. To be considered short term, a debt instrument must mature in nine months or less.
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What does a commercial paper do in the money market?
It is a short-term money market tool, including a promissory note and a set maturity. It acts as an evidence certificate of unsecured debt. It is subscribed at a discount rate and can be issued in an interest-bearing application. The issuer guarantees the buyer to pay a fixed amount in future in terms of liquid cash and no assets.
What are the advantages and disadvantages of commercial paper?
Commercial paper offers a return on investment for buyers without requiring a long-term commitment. This makes it a viable option for institutional investors such as mutual funds and retirement plans that may not be able to tie up their funds for a long period of time.
Last Update: Oct 2021
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Neomia
22.10.2021 06:24
Significant of sustainability broadly speaking, sustainability refers to strategies in business that ensures long-run growth, and profitableness through incorporation of environmental and sociable concerns in the business management.
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26.10.2021 06:12
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22.10.2021 09:00
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