25-8 The loan sales market in which an FI originates and sells a short-term loan of a corporation can be considered a close substitute to the issuance of commercial paper.

Question

Quizplus · Accepted Answer

Both the loan sales market and commercial paper market provide corporations with short-term financing options, making them close substitutes for each other. When an FI originates and sells a short-term loan, it is essentially creating a type of commercial paper for investors to purchase.

25-8 the Loan Sales Market in Which an FI Originates