CFA Level I · CFA Level I Exam · Fixed-Income Markets for Corporate Issuers
Compared with commercial paper issued by a large corporation, bank-sponsored asset-backed commercial paper is most likely to:
Asset-backed commercial paper is most likely backed by a pool of receivables or other financial assets held by a conduit, often with bank liquidity support. Ordinary corporate commercial paper is unsecured and relies on the issuer's credit, and both types have short maturities.
- Abe backed by a pool of receivables or other assetsCorrect
- Bcarry no maturity because it is perpetual
- Crely only on the issuer's unsecured promise to pay
Explanation
Asset-backed commercial paper is issued by a conduit and is supported by a pool of financial assets such as trade receivables, often with bank liquidity support. Ordinary commercial paper is unsecured. Neither type is perpetual.
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