Tax-Exempt Commercial Paper

AAA

DEFINITION of 'Tax-Exempt Commercial Paper'

An unsecured short-term loan, usually issued to finance short-term liabilities, that provides the debt holders (bondholders) some level of tax preference on the earnings from their debt investment at a local, state or federal level, or a combination thereof.

INVESTOPEDIA EXPLAINS 'Tax-Exempt Commercial Paper'

Universities often issue tax-exempt commercial papers to finance their operations with the help of the government. Governments help universities finance their operations because it is beneficial for the population to have post-secondary education. Although governments do not necessarily provide the universities with cash injections, they allow them to issue commercial papers that can earn tax-exempt gains for the people who buy them.

RELATED TERMS
  1. Tax Efficiency

    An attempt to minimize tax liability when given many different ...
  2. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to ...
  3. Accounts Receivable - AR

    Money owed by customers (individuals or corporations) to another ...
  4. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, ...
  5. Interest Rate

    The amount charged, expressed as a percentage of principal, by ...
  6. Tax Exempt

    To be free from, or not subject to, taxation by regulators or ...
Related Articles
  1. Weighing The Tax Benefits Of Municipal ...
    Taxes

    Weighing The Tax Benefits Of Municipal ...

  2. The Money Market
    Retirement

    The Money Market

  3. What You Need To Know About Preferred ...
    Trading Strategies

    What You Need To Know About Preferred ...

  4. Understanding The Bond Behemoth That ...
    Mutual Funds & ETFs

    Understanding The Bond Behemoth That ...

comments powered by Disqus
Hot Definitions
  1. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
  2. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  3. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  4. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  5. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  6. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
Trading Center