Commercial paper

Debt instrument, similar to a bill of exchange, that is traded in the money market; with a short to medium-term maturity

Highly creditworthy institutions issue commercial paper to finance their short-term capital requirements. Commercial paper is usually discounted – i.e., its face value is high in relation to its market price, with the difference representing the “interest“ earned on the investment. The maturity of commercial paper is determined individually by the respective issuer, and is typically less than a year.

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