What is the typical maturity range for Commercial Paper?

What is the typical maturity range for Commercial Paper?

• A. 1 to 270 days
• B. 1 to 5 years
• C. 3 to 6 months
• D. 2 to 3 years

Answer: (A)

Commercial paper is a short-term, unsecured debt instrument issued by corporations to cover immediate funding needs. It is designed for liquidity, with maturities kept very short. The standard range goes from about 1 day up to 270 days (nine months). This upper limit helps keep CP within the money market category and appealing to investors who want quick, low-risk cash equivalents. So, describing the typical maturity as 1 to 270 days best captures both the shortest possible maturities and the regulatory/market practice cap. Descriptions that imply longer time horizons, like several years, don’t fit CP, and narrowing the window to only 3–6 months misses the fact that CP can be as short as one day and can extend up to 270 days.

Commercial paper is a short-term, unsecured debt instrument issued by corporations to cover immediate funding needs. It is designed for liquidity, with maturities kept very short. The standard range goes from about 1 day up to 270 days (nine months). This upper limit helps keep CP within the money market category and appealing to investors who want quick, low-risk cash equivalents. So, describing the typical maturity as 1 to 270 days best captures both the shortest possible maturities and the regulatory/market practice cap. Descriptions that imply longer time horizons, like several years, don’t fit CP, and narrowing the window to only 3–6 months misses the fact that CP can be as short as one day and can extend up to 270 days.