Commercial paper is an unsecured short-term debt or an IOU issued by a financially strong corporation.

Question

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Commercial paper is indeed an unsecured short-term debt or an IOU issued by a financially strong corporation. It is typically used to fund working capital, accounts receivable, and other short-term liabilities. Because it is unsecured, investors rely on the creditworthiness of the issuer to determine the risk of default. Commercial paper typically has a maturity of less than 270 days and is often issued in denominations of $100,000 or more.

Commercial Paper Is an Unsecured Short-Term Debt or an IOU