The difference between commercial paper and a bill of exchange is that:
A)a bill of exchange is a short-term debt instrument whereas commercial paper is not.
B)in a bill of exchange,the issuer and an acceptor are parties to the instrument,as opposed to only the issuer to a commercial paper instrument.
C)only a bill of exchange can be traded in an active secondary market.
D)none of the given options.

Question

Quizplus · Accepted Answer

The main difference between commercial paper and a bill of exchange is that in a bill of exchange, there are two parties involved - the issuer and an acceptor - whereas with commercial paper, there is only one issuer. This means that in a bill of exchange, there is a guarantee of payment from both parties, whereas with commercial paper, there is only the guarantee from the issuer. Additionally, both commercial paper and bills of exchange are short-term debt instruments, so answer A is incorrect. While bills of exchange are often traded in secondary markets, commercial paper can also be traded, so answer C is also incorrect.

The Difference Between Commercial Paper and a Bill of Exchange