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Commercial Paper

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Definitions for: commercial paper
commercial paper

short-term unsecured loan of a financially strong company having a maturity up to 270 days. It is typically issued on a discount basis meaning that the interest is subtracted immediately from the face of the debt to obtain the cash proceeds. Commercial paper interest rates are usually less than the prime interest rate (rate charged by banks to their best customers). Flexibility is another advantage; they can be issued at varying maturity dates when funds are needed.

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