Other articles from investopedia. The amount of short-term corporate IOUs fell to $996. Commercial paper is typically issued for the financing of payroll, accounts payable, inventories, and. B for the week ended Sept. Commercial Paper is defined as a money market instrument that is used for obtaining short-term funding and is usually in the form of a promissory note issued by investment-grade banks and corporations.
What does commercial paper mean?
The maturities in this paper do not last longer than 2days. The UCC identifies four basic kinds of commercial paper : promissory notes, drafts, checks, and certificates of deposit. The most fundamental type of commercial paper is a promissory note, a written pledge to pay money. A promissory note is a two-party paper.
The maker is the individual who promises to pay while the payee or holder is the person to whom payment is promised. The payee can be either a specifically named individual or merely the bearer of the instrument who has it in his or her physical possession when he or she seeks to be paid according to its terms. A note payable to bearer can be paid to the person who presents it for remuneration.
Such an instrument is said to be bearer paper. (more…)