Commercial Paper is an unsecured short-term loan that a highly rated corporation can issue to finance short-term obligations, like accounts receivable or inventory builds.

The high quality paper is typically issued in increments of $100,000 and with a duration of no more than 270 days, which actually makes it a safe investment since the solvency/cash flow of a business is predictable over such a short stretch.

Corporations typically issue commercial paper at discounts to the market rate, given its high quality nature. Institutions and large banks are the biggest buyers of commercial paper.

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