Encyclopedia of Investment Terminology

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Commercial Paper

A Commercial Paper is a note representing a promise to pay, otherwise known as an unsecured promissory note. The note must have a fixed maturity date, which may be of up to nine months.

Commercial papers are issued by banks or corporations to raise funds that will be used to cover short term debts. American law restricts the use of commercial papers to fund short term debts such as operating expenses and current assets such as inventory, but does not allow for the financing of fixed assets such as land.

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