What is a commercial paper, plz be detailed?
The following definition of commercial paper is taken from “Fundamentals of Investments, ” by Stevenson and Jennings: “Short-term promissory notes issued by a private corporation are called commercial paper…the issuing corporation generally belongs to the “honor roll” of financially sound corporations…commercial paper is sold directly to the investor by the issuing organization or the sale is assisted by a dealer… the commercial paper issue is often backed by unused lines of bank credit…typical maturities for commercial paper range from a few days up to 270 days. Commercial paper is usually issued in bearer form and sold on a discount basis in the same manner as treasury bills. However, some commercial paper has been issued recently on an interest-bearing basis. In general, investors in commercial paper are other large corporations, since the minimum round-lot transaction is $250,000 and the typical minimum denomination is $100,000 of face value…although the risk associated w
