COMMERCIAL PAPER Meaning and
Definition
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Commercial paper is a short-term, unsecured debt instrument issued by corporations and other entities to raise funds for financing day-to-day operational activities. It is typically issued by large, creditworthy organizations with strong credit ratings and is readily traded in the open market.
Commercial paper is usually issued at a discount and matures within a few days to a few months from its issuance date. The discount represents the interest paid to investors upon maturity, providing them with a return on their investment. It is often considered to be a cost-effective alternative to obtaining short-term financing from banks or other traditional lenders.
The term "commercial" refers to its primary use by businesses to meet short-term funding needs, such as payroll, accounts payable, and inventory purchases. In contrast to other traditional debt instruments like bonds or bank loans, commercial paper is generally not backed by any collateral. Instead, it relies on the creditworthiness of the issuing entity to attract investors.
Due to the high credit quality associated with commercial paper issuers, it is considered to be a low-risk investment. However, like all investments, it carries certain risks. If the issuing entity experiences financial difficulties or defaults on its obligations, investors may face a loss of principal. Nevertheless, commercial paper is widely used by institutional investors, such as money market funds, as a means to park excess cash while earning a modest return.
Common Misspellings for COMMERCIAL PAPER
- xommercial paper
- vommercial paper
- fommercial paper
- dommercial paper
- cimmercial paper
- ckmmercial paper
- clmmercial paper
- cpmmercial paper
- c0mmercial paper
- c9mmercial paper
- conmercial paper
- cokmercial paper
- cojmercial paper
- comnercial paper
- comkercial paper
- comjercial paper
- commwrcial paper
- commsrcial paper
- commdrcial paper
Etymology of COMMERCIAL PAPER
The word "commercial paper" has etymological origins in the Latin language.
The term "commercial" comes from the Latin word "commercium", which means dealing, trade, or business. It is derived from the combination of the prefix "com", denoting together or with, and "merx", meaning merchandise or goods.
The term "paper" refers to the material often used for writing, printing, and document purposes. It originated from the Latin word "papyrus", which refers to the plant's thick, fibrous stem used to produce paper-like material in ancient times.
When combined, "commercial paper" refers to a financial instrument used in the business or commercial world for short-term borrowing or investment purposes.
Similar spelling words for COMMERCIAL PAPER
- commercial bank,
- commercial traveler,
- commercially,
- commercial loan,
- commercial,
- commercial artist,
- commercialism,
- commercialization,
- commercial agency,
- commercial art,
- commercialise,
- commercial activity,
- commercial credit,
- commercial law,
- commercialised,
- commercialized,
- commercial treaty,
- commercialisation,
- commercial message,
- commercial document,
- commercialize,
- commercial bribery.
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