Short-term paper

includes T-bills, commercial paper and bankers’ acceptances (BAs). These are comprised of short-term notes (under one year) issued by federal and provincial governments and corporations. These instruments are generally purchased at a discount to the issue value. The difference between the purchase price and the value of the note at maturity is the interest earned. Bankers’ acceptances and commercial paper trade on the secondary market. They are similar to T-bills, but o er a slightly higher yield and are often held in money-market funds to boost their yields. These are offered by non-financial corporations and, in the case of BAs, are guaranteed by a bank.

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