This website uses cookies to ensure you have the best experience. Learn more

Commercial Paper Why To Invest.

1002 words - 4 pages

Commercial Paper, otherwise known as CP, is an obligation issued by a corporation or a bank to finance its short term credit needs. It can be either unsecured or asset-backed. Maturities can range from 2 to 270 days. It is available in many denominations, can be either discounted or interest bearing, and usually has a small or nonexistent secondary market. It is issued by companies with high credit ratings and therefore considered to be a relatively low risk investment.Companies like GM or PepsiCo are multi billion dollar companies. They have many accounts with their vendors and suppliers. Sometimes they have short term needs for large amount of cash to pay certain accounts like receivables or inventory. Rather than taking a large loan from a bank they will issue promissory notes to investors or investment companies usually at a lower interest rate than what they could have obtained from a bank loan. This provides a win-win situation for both the company and the investor.Commercial paper is usually issued in very large denominations and isn't ordinarily purchased by the general public. Minimum denominations are usually $100,000, although face amounts as low as $10,000 are available from some issuers. Because most investors are institutions, typical face amounts are in multiples of 1 million. Issuers will usually sell an investor the specific amount of CP needed.Although CP is considered to be an investment vehicle, it is not required to be registered with the SEC. The SEC does not require anything investment with a maturity less than 9 months to be registered. Corporations took advantage of this loophole and this is the reason the maximum maturity on any CP is 270 days.A major factor in the lack of registration with the SEC is that registration for short term securities is especially expensive because the registration fee is a percent of the face amount of each offering. Thirty day notes, rolled over monthly for one year would cost 12 times as much as a one time issuance of an equal amount of one year notes. If companies registered CP with the SEC, even if they were to extend the maturity, the cost would decrease the profitability so much they would actually be better off to borrow the funds from a bank.The SEC however, does restrict what the funds can be used for. Because they are deemed short term, proceeds from CP issues must be used to finance current transactions which include the funding of operating expenses, and the funding of current assets such as receivables and inventories. Proceeds can not be used to finance fixed assets, such as plant and equipment, on a permanent basis.The general maturity length of CP is anywhere form 2-270 days. Some issuing companies prefer to have the maturity last the maximum time possible, while some companies may not need the funds that long, and do not want to pay interest on funds outstanding. The average maturity of commercial paper is estimated to be 30 days. Some issuances of commercial paper have the...

Find Another Essay On Commercial Paper - why to invest.

Jail Overcrowding, how to fix it and why - CRC political science - research paper

3754 words - 16 pages -violent and non-serious crimes, they would be sentenced to 25 years-to-life. Now the “Three Strikes Law” only pertains to violent and serious felonies and those currently serving a third strike sentence were able to petition for a shorter sentence after Proposition 36 was passed in 2012.[footnoteRef:0] [0: "California's Three Strikes Sentencing Law." - Criminal_justice. N.p., n.d. Web. 04 Nov. 2016.] This paper will discuss and explain the

Maldives Analysis - Is it a good country to invest in - Houston Community College - International Business - Research Paper

1472 words - 6 pages and livelihood assets. UNDP Maldives Project Document (2009) Conclusion. In my opinion Maldives is not a good country to invest in due to several factors. First, the lack of transportation network and distances among islands make the logistic a real challenge, also these increase the price of the goods and services. Second, the political system of Maldives makes it very risky, because the government does not give guaranties for foreign companies

"Global Warming: Time To Act": A persuasive paper on why people should stop global warming

1580 words - 6 pages right now is affecting the world in ways that are very negative. While this generation of people may not see the full effects of global warming, it will surely hurt the people of a new generation. Why would people decide to leave a world that has been ruined by their actions? If global warming continues, the world will have less biodiversity, more natural disasters, and a more dangerous way of life for humans. Because it would be extremely selfish

why free speech comes with a license to offend - Fremont academy Ap languange - Research paper

1272 words - 6 pages Gutierrez,1 George Gutierrez Ms. Compos 23/2/18 Ap language Political correctness why we still need a license to offend More than 150 years ago, a Tammany Hall politician named, William “Boss” Tweed responded to an offensive cartoon about him with the famous line “Stop them damned pictures”. Today it seems that everyone wants those “damned pictures” to stop with concerns for their tribes and there themselves. This displayed sense of tribalism

Information Literacy, what it is, why we need it, why is it important. paper demonstrates students ability to comprehend the concepts of infromation literacy

814 words - 3 pages guide of researching various learning aspects of information literacy. valid, relevant material that we retrieve gives us confidence in using that information to make a decision or create a product.At times I find the concept of Information Literacy too broad and overwhelming. Why should students learn all this? I realize now that the reason such emphasis is placed on information literacy is to create an understanding of the research process. These

Gay Marriage This paper is written to support homosexual marriages, and offers three reasons why it should be accepted

708 words - 3 pages partners, and interracial marriage is now widely accepted, both in statute and in society. Marriage is the highest expression of love between two people, and the government should not be allowed to decide whom we can or cannot love. Marriage has drastically changed over the years; wives are now equal and people accept interracial marriages, and should also accept same-sex marriages. If same sex marriages were barred in all 50 states, it would be a

Research paper estblishing why the ghanaian diet is more nutritious and affordable but less accesssible in comparison to the spanish meditarranean die

2136 words - 9 pages cultivated on a large scale sin Ghana as compared to Spain, there are a wide range citrus fruits and some wild fruits like soursop (aluguntugui) which is lowers the risk of cancer(naturalmedicine.com, 2012) To conclude, I have established reasons why the Ghanaian diet is superior to the Mediterranean diet. Although not easily accessible, it is nutritious and affordable which are some pre-requisites for enhancing food security. Works Cited Dietary

Cloning Needs to Be Illegal This paper was written for the purpose of proving why a social issue must be changed

2634 words - 11 pages understanding of how genes turn on and off and why cells divide, leading to the ability to manipulate genes and cells to cure and prevent. Cloning helps raise the potential for individuals to create children. Cloning would allow both infertile parents and homosexual couples to have their own children. Cloning could be the only way for a couple to carry on a their genetic line. It is also estimated that a person with favored traits could be cloned such

A concept paper on body peiercing. Includes the history, risks, common piercing areas, and comments on why people choose to get body piercings

940 words - 4 pages Have you ever wondered why in the world there are people walking around with metal on their faces, in their mouth, and God only knows where else? The popular trend of body piercing has been around since ancient times and has many concerning issues such as infections, safety, and risks. However, numerous people still choose to put their bodies in jeopardy to be part of the latest fashion craze.The history of body piercing varies among different

Hero: this paper is about the meaning of a hero and why you shoud and shouldn't admire someone. It also decribes a black female leader to emulate

1708 words - 7 pages Hero?Many people have heroic qualities but being a hero and having heroic qualities are completely different. No one can learn how to be a hero and no one can teach it. A hero should know how to decide what is right, what is wrong, and what to stand for. A hero is someone that you see as being higher than you in strength, greatness and confidence. You wish someday that you could be just like them. And when you get to their point of greatness you

This paper expresses the views christian belief on the topic of abortion and why it is wrong. This paper gives driect quotes from the bible and then goes into futher detail to support the facts

1013 words - 4 pages The Christian belief in the sanctity of life is based on the teachingsof famous Christians and on what they read in the bible, the teachingsof Jesus. A quote from the bible which seems to support the view thatabortion is wrong is from Psalm 139:13, verses 15-16,"You created every part of me;You put me together in my mother's womb...When my bones were being formed,Carefully put me together in my mother's womb.When I was growing there in secret

Similar Essays

Municipal Bonds Why To Invest In Them

1299 words - 5 pages . When you invest in any bond, your primary concern should be the issuer's ability to meet its financial obligations. Issuers of municipal bonds have an outstanding record of meeting interest and principal payments in a timely manner. Another way to evaluate an issuer it to examine its credit rating; many bonds are graded by ratings agencies such as Moody's, Standard & Poor's, and Fitch. There are many other ratings, but what's important is that

Why This Is A Perfect Time To Invest In Phones?

850 words - 4 pages phones have been manufactured for a better visual representation to display the message, and the ease to operate this technology. With these increasingly high benefits the demand for the product has gone much higher and, so this is why it is a perfect time to invest in phones. Alexander graham bell was the first to patent the telephone, as an "apparatus for transmitting vocal or other sounds telegraphically". Charles Bourseul, Antonio, Johann

Why The Law Of Damages Is More Favourable To Commercial Interests Than Personal Interests

4293 words - 17 pages arguments that are derived from within a particular framework of perception and are literally incapable of being challenged from any external framework of perception. This paper will attempt to provide a critique of the law of remedies that will transcend the particularity of specific disciplines by arguing that damages for personal injury and death are indefensibly favourable to commercial interests, both from an economic point of view and a

Q. Why And How Is Australia's 'public Broadcaster', The Abc, Intrinsically Different To Commercial Radio Networks?

1427 words - 6 pages This assignment will examine both why and how the Australian Broadcasting Corporation ( ABC ) radio services are different to those of commercial radio. The origins and history of the ABC will be given, as will that of commercial radio in Australia. The reasons the two differ will then be detailed, combining with why these differences existence.In 1924 the Sykes Committee made recommendations about how broadcasting should be organised in Britain