Commercial Paper (CP)

A short-term debt instrument issued by a corporation meant for meeting short term liabilities.  Commercial Paper does not last longer than one year and does not have to be registered with the SEC, which makes CP more cost effective.  Commercial paper also is not backed by any collateral.  Therefore, only companies with high credit ratings are able to issue CPs.  Commercial paper is very similar to bonds, but with a far shorter  duration.

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