Large firms issue commercial paper as a money-market security to raise money to pay short-term debt obligations.
Yes. Commercial paper is a type of short-term, unsecured debt that is issued by institutions to raise quick cash. It serves as a substitute for going through the time, expense, and difficulty of obtaining a business loan.
Large organisations issue commercial paper, a money-market product, to raise cash to pay for short-term debt commitments (like payroll), and it is only guaranteed by the issuing bank or company's promise to repay the face amount on the note's maturity date.
Having a tenure of 1 to 270 days, commercial paper is a type of short-term, unsecured loan.
Commercial paper is mostly issued by financial institutions and big businesses because of their excellent credit ratings. The market has confidence that they would settle unsecured promissory notes of this kind.
Therefore, the statement is true.
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