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Jackson Automotive Inc. of California agrees to sell specialized automotive parts to Hidatsi of Korea. Because the two companies have never done business with each other, Jackson requires a banker's acceptance as payment for the $1,000,000 order. The banker's acceptance carries a 1.4% commission per annum and payment is to be received in 6 months. If Jackson Inc. chooses to discount or sell the bankers acceptance to its bank, the discount rate is 1.00% per annum.
-Refer to Instruction 15.1. ________ is an unsecured promissory note.

Question

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Commercial paper is an unsecured promissory note, meaning it is a written promise to pay a specific amount on a specific date without any collateral backing it up. This is different from a banker's acceptance, which involves a bank guaranteeing payment and therefore has some form of security.

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