Commercial Paper (CP)

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Definition: Commercial Paper (CP)

These are short term securities with maturities less than 270 days issued by a corporation to finance its immediate needs. These are therefore money market instruments. These may or may not be backed by assets such as loans and mortgages. Since these are issued by a corporation to another corporation, there is no secondary market for these financial instruments. CPs are highly liquid investments and the debt is issued at a discount value reflecting the ongoing interest rates.


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