What Are Examples Of Commercial Paper

Commercial paper in the global financial market is an unsecured promissory note with a fixed maturity of rarely more than 270 days.

What are examples of commercial paper. Brenda is now the holder of this note commercial paper. Major investors in commercial paper include money market mutual funds and commercial bank trust departments. Because no dates is stated on the note it is payable on demand.

Example of commercial paper a business entity issues a commercial paper worth 1000000 which will be redeemable after completion of 100 days. Amy creates a document in which she promises to pay the holder of the note 500. It is issued at a discount to the face value and upon maturity the face value becomes the redemption value.

If the discount is 1 and other charges worth 15000 were applicable. A secondary market also exists for commercial papers but the market players are mostly financial institutions. It is issued in large denominations e g 100 000.

An example of commercial paper is when a retail firm is looking for short term funding to finance some new inventory for an upcoming holiday season. The firm needs 10 million and it offers. It is an unsecured short term debt tool that is provided by a corporation typically for the financing of accounts payable inventories and meeting short term liabilities.

Commercial paper is a money market security issued sold by large corporations to obtain funds to meet short term debt obligations for example payroll and is backed only by an issuing bank or company promise to pay the face amount on the maturity date.