Question

Find an article that mentions commercial paper. Then do either or both of the following: a)...

Find an article that mentions commercial paper. Then do either or both of the following:

a) Find a sentence in the article that illustrates the point that commercial paper is a short-term borrowing (i.e., a money market security). Explain how the sentence corroborates the definition of money market security that we have learned.

b) Summarize the article's main points in your own words. Provide a link to the article or other citation.

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Answer #1

a) The article related to commercial paper is given below

https://www.reuters.com/article/usa-commercialpaper/u-s-commercial-paper-market-shrinks-to-smallest-in-16-years-idUSL2N1CC0SX

The fourth paragraph in this article talks about commercial paper that it is usually issued by the companies to fund their inventories and payrolls whereas financial institutions use proceeds from this short-term debt to fund their trades.

Money market securities are characterised by high liquidity. These are fixed income securities with short-term marurities of less than a year. These securities also provide relatively higher degree of safety compared to other securities since these securities are issued by the companies with highest ratings as issued by the credit rating agencies.

The above points show that commerical paper has all the characterisitics of a money market security.

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