A commercial paper refers to a short-term, unsecured debt obligation that is issued by financial institutions and large corporations. Corporations are allowed to enter into contracts, sue and be sued, own assets, remit federal and state taxes, and borrow money from financial institutions.
People also ask, what does commercial paper consist of?
Commercial paper is a form of unsecured, short-term debt commonly issued by companies to finance their payrolls, payables, inventories, and other short-term liabilities. Maturities on most commercial paper ranges from a few weeks to months, with an average of around 30 days.
Beside this, what does it mean to invest in commercial paper? Commercial paper is a fixed-income security used by large corporations or banks to meet a short-term financial need. When you invest in commercial paper, you are paid a fixed interest rate plus the note’s principal balance upon its maturity.