Commercial paper

Definition

Commercial paper is a short-term, unsecured promissory note issued by corporations to finance their immediate operational needs such as inventory and receivables. It is typically issued at a discount from face value and reflects prevailing market interest rates.

Related terms

Corporate Bonds: Long-term debt instruments issued by corporations to finance their operations, usually with a fixed interest rate.

Treasury Bills: Short-term government securities issued at a discount from the face value and mature in one year or less, offering a secure investment option.

Liquidity: The ease with which an asset can be converted into cash without significantly affecting its value, crucial for meeting short-term financial obligations