Financial Crisis Buzzwords
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Definition: Commercial paper is an unsecured, short-term loan given by a corporation rather than a bank. The funds from the loans, typically used by companies, are issued in denominations of $100,000 or more. Under normal circumstances these are safe investments because a company's financial situation can be predicted over a few months. But corporations have recently grown fearful of purchasing these loans because of the likelihood that they are backed by failing subprime mortgages.
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