When the commercial paper matures, it is rolled over to new investors by the Water Authority’s commercial paper dealers.
But you’ll have to take more credit risks, he says.
Fortunately, highly rated companies usually issue commercial paper.
Both are issued at a discount and accrete at the face value.
Maturities on commercial paper are less than 270 days, capped by government restrictions.
Treasury bills, federal agency notes, certificates of deposit (CDs), eurodollar deposits, commercial paper, bankers' acceptances, and repurchase agreements are examples of instruments.
The suppliers of funds for money market instruments are institutions and individuals with a preference for the highest liquidity and the lowest risk.
Commercial paper is short-term, unsecured debt issued by corporations.
Firms use this money to finance operations, because rates are usually cheaper than those for their long-term debt.
Money markets exist both in the United States and abroad.
The short-term debts and securities sold on the money markets—which are known as money market instruments—have maturities ranging from one day to one year and are extremely liquid.