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Commercial paper is a short-term unsecured promissory note issued by corporations at a discount with maturities between 3 to 270 days. It is issued by corporations with healthy credit ratings and invested in by individuals, banks, corporations, NRIs, and FIIs. Commercial paper originated in the 1790s when merchants and shippers used it to meet short-term obligations and was first recorded in 1918 with the Federal Bank of NY. Recent innovations include commercial paper backed by underlying assets where the price fluctuates with market prices and consumer confidence.
Commercial paper is a short-term unsecured promissory note issued by corporations at a discount with maturities between 3 to 270 days. It is issued by corporations with healthy credit ratings and invested in by individuals, banks, corporations, NRIs, and FIIs. Commercial paper originated in the 1790s when merchants and shippers used it to meet short-term obligations and was first recorded in 1918 with the Federal Bank of NY. Recent innovations include commercial paper backed by underlying assets where the price fluctuates with market prices and consumer confidence.
Commercial paper is a short-term unsecured promissory note issued by corporations at a discount with maturities between 3 to 270 days. It is issued by corporations with healthy credit ratings and invested in by individuals, banks, corporations, NRIs, and FIIs. Commercial paper originated in the 1790s when merchants and shippers used it to meet short-term obligations and was first recorded in 1918 with the Federal Bank of NY. Recent innovations include commercial paper backed by underlying assets where the price fluctuates with market prices and consumer confidence.
which is made payable on a stated date and typically issued at a discount. Short Term- Maturity period of 3 to 270 days in us It is issued by corporations with healthy credit rating
History Evidence supports that commercial paper may have started as early as 1790 Issued by merchant and Shippers Helped in meeting short term obligations First recorded with Federal Bank of NY in 1918 Recent Innovations CP is backed by Underlying assets Price is derived from Underlying assets Created to provide more liquidity in the market Fluctuates with market prices and consumer confidence
Certificate of Deposit It can be defined as a negotiable money market instrument which is issued in a dematerialized form or as a promissory note for funds deposited at bank or other financial institution for specified period Format It is of 2 types 1. Dematerialized 2. Physical The CD is issued by commercial banks, local banks and all financial institution that have been permitted by RBI
Who can subscribe Companies Corporations Individuals Trust Funds Association
Eligibility, Maturity and Issue Price The CD may be issued at discount The interest rate on CD will have to be reset periodically Maturity of CD should not be less than 7 days and not more than 1 year In case of financial institution it should minimum 1 year and maximum 3 years