This helps enrich the market structures of interest rates and risks and liquidity, and generates a market yield curve that covers short-, mid- and long-term financial products.Tags: Creative Writing SheetsEssay About Your TeacherBored Of Studies Belonging ThesisMammographic TomosynthesisEssay On Substance Abuse In The WorkplaceThesis On RecruitmentCollege Applications Without EssaysNeed Help With Essay
Commercial paper is available in a variety of denominations and usually ranges in maturity from 2 to 270 days.
In addition to promissory notes, commercial paper may include drafts, bills of exchange and checks, acceptances, bills of lading, warehouse receipts, orders for delivery of goods, and express orders.
Thus, the seller may state that if payment is made within 10 days of the invoice date, a 2 percent cash discount will be allowed.
If the cash discount is not taken, payment is due 30 days after the date of invoice.
Banks occupy a pivotal position in the short-term and intermediate-term money markets.
As a firm’s financing needs grow, banks are called upon to provide additional funds.
For many corporations, borrowing short-term money from banks is often a labored and annoying task.
Their desire to avoid banks as much as possible has led to the widespread popularity of commercial paper.
Commercial paper is issued for periods varying from two to six months.
The rates on prime commercial paper vary, but they are generally slightly below the rates paid on prime business loans.