1-8 BB ALOK

K.J SOMAIYA COLLEGE OF ARTS AND COMMERCE

VIDYAVIHAR (EAST), MUMBAI-400077

PROJECT ON:

“ “COMMERCIAL PAPER”

BACHELOR OF COMMERCE (FINANCIAL MARKETS)

SEMESTER – V (2015-2016)

SUBMITTED

In Partial fulfillment of the requirements for the Award of the degree of

Bachelor of Commerce (Financial Markets)

By

ALOK SAHU

ROLL NO : 43

CERTIFICATEThis is to certify that MR.ALOK.SAHU of B.COM FINANCIAL

MARKETS SEMESTER –V (2015-2016) has successfully completed

the project on “COMMERCIAL PAPER” under the guidance of

PROF MRS. VIRENDER KAUR BHATIA.

(MRS VIRENDER KAUR BHATIA) EXTERNAL EXAMINER

INTERNAL PROJECT GUIDE

PROF. HARESH PARPIANI DR.(SMT) SUDHA VYAS

(BFM CO-ORDINATOR) PRINCIPAL

DECLARATION

I, MR.ALOK SAHU the student of B.COM (FINANCIAL

MARKETS) SEMESTER-V (2015-2016) hereby declare that I

have completed the project on “COMMERCIAL PAPER”

Where ever the data/information have been taken from any books or

other sources the same have been mentioned in bibliography.

The information submitted is true and original to the best of my

knowledge.

_________________

Signature of the n Signature of the student

ALOK SAHU

(ROLL NO.43)

ACKNOWLEDGEMENT

I take this opportunity with great pleasure to present before you this project on

“COMMERCIAL PAPER” which is a result of co-operation and hard work .I

would like to express my deep sense of gratitude toward all those people without

whose guidance and inspiration this project would never be fulfilled.

Heartily, thanks to Mumbai University for giving me the opportunity to work

on this project. I would also like to thank our principal DR.(SMT) SUDHA VYAS

for giving me such a brilliant opportunity to present a creative outcome in the form

of a project.

Any accomplishment requires the efforts of many people and this project is not

different. I find great pleasure in expressing my deepest sense of gratitude towards

my project guide “PROF MRS. VIRENDER KAUR BHATIA.”, whose

guidance & inspiration right from the conceptualization to the finishing stages

proved to be very essential & valuable in the completion of the project.

I would like to thank library staff, and my classmates for their invaluable

suggestions & guidance for my project work. Lastly, I would also like to thank my

parents without whose consent and support it would have not been possible for me

to complete this project

EXECUTIVE SUMMARY

Commercial paper, in the global financial market,is an unsecured promissory note

with a fixed maturity of no more than 270 days.

Commercial paper is a  money-market security issued (sold) by

large corporations to obtain funds to meet short-term debt obligations (for

example, payroll), and is backed only by an issuing bank or corporation's promise

to pay the face amount on the maturity date specified on the note. Since it is not

backed by collateral, only firms with excellent credit ratings from a

recognized credit rating agency will be able to sell their commercial paper at a

reasonable price. Commercial paper is usually sold at a discount from face value,

and generally carries lower interest repayment rates than bonds due to the shorter

maturities of commercial paper. Typically, the longer the maturity on a note, the

higher the interest rate the issuing institution pays. Interest rates fluctuate with

market conditions, but are typically lower than banks' rates.

Commercial paper – though a short-term obligation – is issued as part of a

continuous rolling program, which is either a number of years long.

Commercial paper is the collective term for a variety of instruments—including

checks, certificates of deposit, and notes—that are used to pay for goods;

commercial paper is basically a contract to pay money. The key to the central role

of commercial paper is negotiability, the means by which a person is empowered

to transfer to another more than what the transferor himself possesses. The law

regulating negotiability is Article 3 of the Universal Commercial Code.

Commercial paper can be divided into two basic types: the draft and the note. A

draft is a document prepared by a drawer ordering the drawee to remit a stated sum

of money to the payee. Drafts can be subdivided into two categories: sight drafts

and time drafts. A note is a written promise to pay a specified sum of money on

demand or at a definite time.

A special form of draft is the common bank check, a draft drawn on a bank and

payable on demand. A special form of note is the certificate of deposit, a written

acknowledgment by a bank that it has received money and agrees to repay it at a

time specified in the certificate.

In addition to drawers, makers, drawees, and payees, one can deal with commercial

paper in five other capacities: as indorsers, indorsees, holders, holders in due

course, and accommodation parties.

A holder of a negotiable instrument must be able to ascertain all essential terms

from its face. These terms are that the instrument (1) be in writing, (2) be signed by

the maker or drawer, (3) contain an unconditional promise or order to pay (4) a

sum certain in money, (5) be payable on demand or at a definite time, and (6) be

payable to order or to bearer. If one of these terms is missing, the document is not

negotiable, unless it is filled in before being negotiated according to authority

given.

INDEX

SR.NO TOPIC PG.NO

1 INTRODUCTION TO COMMERCIAL PAPER 1-3

2 HISTORY OF COMMERCIAL PAPER 4-5

3 ISSUANCE 6-15

4 LINE OF CREDIT 16

5 COMMERCIAL PAPER YIELDS 17-18

6 BASIC CHARACTERISTICS 19-21

7 COMMERCIAL PAPER MARKETS 22-23

8 RATES & PRICING 24-26

9 MONEY MARKET COMMERCIAL PAPER 27-28

10 TAX EXEMPT COMMERCIAL PAPER 29

11 ASSET BACKED COMMERCIAL PAPER 30-31

12 COMMERCIAL PAPER FUNDING PROGRAM(CCFP)

32

13 ADVANTAGES/DISADVANTAGES OF COMMERCIAL PAPER

33-34

14 COMMERCIAL PAPER IN INDIA 35-37

15 GROWTH OF COMMERCIAL PAPER MARKET IN INDIA

38-41

16 TYPES OF COMMERCIAL PAPER 42-47

17 NEGOTIABILITY 48-52

18 ENDORSEMENTS 53-58

19 DEFENSES 59-61

20 COMMERCIAL PAPER: MORE RISK LESS RETURN 62-66

21 RECOMMENDATION & CONCLUSION 67

22 BIBLIOGRAPHY 68

23 WEBLIOGRAPHY 69