Commercial Paper Is A Short-Term Security Issued By

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T-bills (and other Treasuries) are considered to be the safest investments in the financial market because governments back them.

However, their exceptional safety means a lower return than provided by corporate bonds, certificates of deposit and money market funds.

Also, you don't automatically get back all of your investment if you cash out your T-bills before the maturity date.

Many corporations prefer, as much as possible, to avoid borrowing short-term money from banks. Commercial paper is an unsecured short-term debt instrument issued by a corporation.

There are several variations on repos: Options are versatile securities that can be used to make a profit when a stock price goes down (put option or option to sell) or when the stock price goes up (call option, or option to purchase).

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In other words, if you pay ,800 for a T-bill with a face value of ,000 and keep it until maturity, you'll earn 0 in interest.

T-bills are very popular because they're one of the few affordable money market instruments.

Unfortunately, they have led to major fraud when backed by unreliable assets.

Lenders have lost a lot of money because they didn't sufficiently verify the validity of the collateral offered to them.


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