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.

RELATED TERMS
  1. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, ...
  2. Bank Discount Rate

    The interest rate for short-term money-market instruments like ...
  3. Money Market

    A segment of the financial market in which financial instruments ...
  4. Discount House

    Primarily operating in the United Kingdom, a firm that buys, ...
  5. Commercial Paper Funding Program ...

    A program instituted in October of 2008 that created the Commercial ...
  6. Government Paper

    Debt securities that are issued or guaranteed by a sovereign ...
Related Articles
  1. Investing

    Commercial Paper

    Commercial paper is a short-term debt security issued by financial companies and large corporations. The corporation promises the buyer a return, or profit, for making the loan. The return is ...
  2. Investing

    Understanding Short-Term Investments

    These are investments that have a maturity date of less than one year, or will be liquidated within a year.
  3. Investing

    5 Signs Of A Credit Crisis

    These indicators can illuminate the depth and severity of problems in the credit markets.
  4. Financial Advisor

    Money Market Mayhem: The Reserve Fund Meltdown

    This event serves as a stark reminder to investors about understanding their portfolios.
  5. Investing

    7 Facts You Didn't Know About The Greenback

    There's more to that $10 bill in your pocket than you think - read on for some interesting facts about U.S. currency.
  6. Personal Finance

    Procrastinator's Guide To Bill Payment

    Avoid punishing late fees and keep your credit score intact with these 10 tips.
  7. Personal Finance

    The 7 Best Places To Put Your Savings

    You work hard to put your money away for the future, but where you should you keep it?
  8. Personal Finance

    Fed Will Print More $50 Bills This Year

    It costs three times more to produce a $50 bill than a $1 bill. Here's why:
  9. Investing

    What are Cash Equivalents?

    Cash equivalents are money market instruments.
RELATED FAQS
  1. Can a business ever be too small to issue commercial paper?

    See why market forces regulate the size of companies that issue commercial paper, even though there are no official regulations ... Read Answer >>
  2. Can retail investors buy commercial paper?

    Find out whether retail investors buy commercial paper, and learn about the restrictions that often prevent individual investors ... Read Answer >>
  3. What happens when a company defaults on its commercial paper obligations?

    Read about the possible consequences of a large corporation defaulting on its commercial paper obligations even though the ... Read Answer >>
  4. What is the difference between a bill of exchange and a promissory note?

    Learn what bills of exchange and promissory notes are, along with notation of the primary differences between these two documents. Read Answer >>
  5. Who uses bills of exchange?

    Find out who uses bills of exchange, why they are important in international trade and what happens when a bill is traded ... Read Answer >>
  6. What's the difference between bills, notes and bonds?

    Treasury bills (T-Bills), notes and bonds are marketable securities the U.S. government sells in order to pay off maturing ... Read Answer >>
Hot Definitions
  1. Trickle-Down Theory

    An economic idea which states that decreasing marginal and capital gains tax rates - especially for corporations, investors ...
  2. North American Free Trade Agreement - NAFTA

    A regulation implemented on Jan. 1, 1994, that eventually eliminated tariffs to encourage economic activity between the United ...
  3. Agency Theory

    A supposition that explains the relationship between principals and agents in business. Agency theory is concerned with resolving ...
  4. Treasury Bill - T-Bill

    A short-term debt obligation backed by the U.S. government with a maturity of less than one year. T-bills are sold in denominations ...
  5. Index

    A statistical measure of change in an economy or a securities market. In the case of financial markets, an index is a hypothetical ...
  6. Return on Market Value of Equity - ROME

    Return on market value of equity (ROME) is a comparative measure typically used by analysts to identify companies that generate ...
Trading Center