What is commercial paper?
A) A specific amount on deposit in a checking account that is owned by corporations
B) A synonym for near-monies
C) Interest-bearing bonds offered by large corporations
D) Long-term bonds issued by only the largest corporations
E) Short-term promissory notes issued by large corporations

Question

Quizplus · Accepted Answer

Commercial paper is a short-term promissory note issued by large corporations to raise funds quickly to meet short-term liabilities or operational expenses. Choice A describes a checking account balance, not commercial paper. Choice B describes assets that are similar to money but not commercial paper. Choice C is referring to corporate bonds, which can have much longer maturities than commercial paper. Choice D is almost correct, but it could mislead test-takers because some smaller corporations can also issue long-term bonds. Therefore, choice E is the best answer.

What Is Commercial Paper