DEFINITION of 'Short-Term Paper'

Financial instruments typically with original maturities of less than nine months. Short-term paper is typically issued at a discount and provides a low-risk investment alternative. Examples of short-term paper include U.S. Treasury bills and negotiable instruments issued by financial and non-financial corporations, such as commercial bills, promissory notes, bills of exchange and certificates of deposit.

BREAKING DOWN 'Short-Term Paper'

The majority of financial institutions rely on being able to roll over short-term paper for their day-to-day financing needs. During the U.S. financial-market meltdown of 2008, institutions essentially halted issuing short-term paper, and the U.S. government had to intervene to provide liquidity for corporations caught without the means to finance operations.

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RELATED FAQS
  1. How can retail investors invest in commercial paper?

    Find out how individual retail investors can purchase short-term commercial paper, but why it rarely makes good investment ... Read Answer >>
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    Read about the possible consequences of a large corporation defaulting on its commercial paper obligations even though the ... Read Answer >>
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    Learn what bills of exchange and promissory notes are, along with notation of the primary differences between these two documents. Read Answer >>
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    Find out who uses bills of exchange, why they are important in international trade and what happens when a bill is traded ... Read Answer >>
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