Firms must have high credit quality in order to issue commercial paper; therefore,all commercial papers are equally risky.

Question

Quizplus · Accepted Answer

While it is true that firms must have high credit quality to issue commercial paper, it does not mean that all commercial papers are equally risky. Credit ratings agencies assign different ratings to different commercial papers based on their assessment of the creditworthiness of the issuer, which can range from highly rated (low risk) to low rated (high risk). Therefore, commercial papers with different ratings carry different levels of risk to investors.

Firms Must Have High Credit Quality in Order to Issue