Commercial paper is essentially:
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A. B. C. D.B
Commercial paper (CP) is a short-term unsecured promissory note issued by a corporation, typically with a maturity of 270 days or less. It is a cost-effective way for corporations to raise short-term funds, as the interest rate on commercial paper is typically lower than that of bank loans or other forms of borrowing.
CP is issued in the primary market, usually through investment banks, and is then traded in the secondary market. It is generally considered a safe investment, as it is usually issued by large, creditworthy corporations with a strong credit rating.
Unlike a junk bond, which is a high-risk, high-yield debt security issued by a corporation with a low credit rating, commercial paper is issued by corporations with a strong credit rating. CP is also different from an intermediate-term corporate bond, which has a longer maturity and is typically used to fund long-term projects.
Finally, commercial paper is not a certificate that may be exchanged for a share of common stock at a specified future date, as described in option D. This describes a stock warrant, which gives the holder the right to buy shares of a company's stock at a specific price at a future date.
In conclusion, the correct answer to the question is B: Commercial paper is a short-term unsecured corporate IOU.