The loan sales market in which an FI originates and sells a short-term loan of a corporation can be considered a close substitute to the issuance of commercial paper.

Question

Quizplus · Accepted Answer

Both loan sales and commercial paper are short-term financing options for corporations. In loan sales, an FI originates a loan and then sells it to investors in the loan sales market, while commercial paper is a type of unsecured short-term debt issued directly by a corporation to investors. The loan sales market can be considered a close substitute to the issuance of commercial paper because they both provide short-term funding for corporations.

The Loan Sales Market in Which an FI Originates and Sells