U.S.commercial paper is only issued by firms with very high credit ratings because:
A)the Securities and Exchange Commission only allows firms with very high credit ratings to issue commercial paper.
B)only firms with very high credit ratings can list commercial paper on the capital markets.
C)U.S.commercial paper is unsecured and investors are only willing to buy commercial paper that is backed by firms with very high credit ratings.
D)U.S.commercial paper is very expensive to issue and only firms with very high credit ratings can afford to issue it.

Question

Quizplus · Accepted Answer

U.S. commercial paper is unsecured, meaning that the issuer does not have to provide collateral to guarantee repayment. Therefore, investors are only willing to purchase commercial paper from firms with very high credit ratings, as they are seen as less likely to default on their debts. This ensures that the investor is protected against the risk of default.

USCommercial Paper Is Only Issued by Firms with Very High