Commercial paper is often issued by large high-quality corporations because the market interest rate they pay on this borrowed money is lower than what they would pay at a commercial bank.

Question

Quizplus · Accepted Answer

This is true. Commercial paper is a type of short-term debt that is issued by high-quality corporations in order to borrow money. These corporations can often obtain a lower interest rate on commercial paper than they would pay at a commercial bank because the market is highly competitive, and investors are willing to accept lower returns in exchange for the higher credit quality of the issuer.

Commercial Paper Is Often Issued by Large High-Quality Corporations Because