Commercial Paper (CP) Issued in the USA Has a Maximum

question 55

Multiple Choice

Commercial paper (CP) issued in the USA has a maximum maturity of nine months, most
CPs are sold with a maturity of

• A) sixty days or less
• B) thirty days or less
• C) ninety days or less
• D) one hundred and eighty days or less

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Definitions:

Acceptor

A person (drawee) who accepts and signs a draft to agree to pay the draft when it is presented.

Draft

An instrument validating an order by a drawer to a drawee to pay a payee.

Imposter Rule

A legal principle concerning negotiable instruments which states that if an impostor induces a payor to issue a check made payable to the impostor, the drawer is liable for the amount to a holder in due course.

Forgery Rule

A legal principle that addresses the falsification of documents and the consequences associated with such acts.