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Commercial Paper - Explained

What is Commercial Paper?

Written by Jason Gordon

Updated at September 26th, 2021

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Table of Contents

What is Commercial Paper?Discussion QuestionAcademic Research

What is Commercial Paper?

Commercial paper is a broad categorization of financial instruments (also referred to as an instrument) promising to pay or ordering payment to a person legally entitled to enforce the instrument. Because it has value for the individual in possession or holding the instrument, it is used as a substitute to money in commercial transactions.

Example: A check is commercial paper that orders a third party to pay money. A promissory note is another form of commercial paper that evidences a loan and outlines the duty of the maker of the note to make payment to the holder of the note.

Next Article: Types of Commercial Paper Back to: COMMERCIAL PAPER

Related Topics

  • What is Commercial Paper?
  • What are the common types of commercial paper?
  • Negotiable Instrument 
  • Who is a Holder of a negotiable instrument?
  • Commercial Paper Funding Program

Discussion Question

Why do you think it is necessary for commercial paper to entail an unconditional right to be paid? How is commercial paper different from a contract?

Academic Research


commercial paper

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