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What are the advantages of commercial paper in comparison with bank borrowing at the prime rate?

Answer:

In comparison to bank borrowing, commercial paper can generally be issued at below the prime rate. Furthermore, there are no compensating balance requirements, though the firm is required to maintain approved credit lines at a bank. Finally, there is a certain degree of prestige associated with the issuance of commercial paper.

First answer by Jcraig713. Last edit by Jcraig713. Contributor trust: 7 [recommend contributor recommended]. Question popularity: 3 [recommend question].

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