What you can own

Commercial paper

Short-term unsecured borrowing issued by large companies, usually maturing within nine months.

How it works

It is a cheap way for creditworthy companies to fund working capital, and a standard holding for money market funds.

The market can close abruptly in a credit crisis, which is precisely when the companies relying on it need it most.

Money market fundA fund holding very short-term, high-quality debt, used as an alternative to a deposit account.
Credit riskThe risk that a borrower fails to make the payments it promised.
Liquidity riskThe risk of not being able to sell when you want to, without accepting a bad price.

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All 10 What you can own terms · The full glossary, 433 terms

Educational reference only. Nothing here is investment advice or a recommendation to buy or sell anything, and tax treatment depends on your own circumstances and the country you are in.