Commercial Paper

It is an important money market instrument in advanced countries like USA to raise short term funds. It is a form of unsecured promissory note issued by firms to raise short term funds. The commercial paper market in the USA is a blue-chip market where financially sound and highest rated companies are able to issue commercial papers. The buyers of commercial paper include banks, insurance companies, unit trusts and firms with surplus funds to invest for a short period with  minimum risk. Given this objective of the investors in the commercial paper market, there would be demand for commercial papers of highly creditworthy companies.

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