What has the highest interest rate? 1 payday loans 2 bank loans 3 credit cards

What has the highest interest rate? 1 payday loans 2 bank loans 3 credit cards

The most important risks of a factor are:

  • Counter party credit risk: risk covered debtors can be re-insured, which limit the risks of a factor. Trade receivables are a fairly low risk asset due to their short duration.
  • External fraud by clients: fake invoicing, mis-directed payments, pre-invoicing, unassigned credit notes, etc. A fraud insurance policy and subjecting the client to audit could limit the risks.
  • Legal, compliance, and tax risks: a large number and variety of applicable laws and regulations depending on the country.
  • Operational: operational risks such as contractual disputes.

Commercial Paper

Commercial paper is a money-market security issued (sold) by large corporations to get money to meet short term debt obligations.

Learning Objectives

payday loan in Hermiston OR

Analyze the commercial paper market

Key Takeaways

Key Points

  • There are two methods of issuing paper. The issuer can market the securities directly to a buy and hold investor such as most money market funds. Alternatively, it can sell the paper to a dealer, who then sells the paper in the market.
  • Commercial paper is a lower cost alternative to a line of credit with a bank. Once a business becomes established, and builds a high credit rating, it is often cheaper to draw on a commercial paper than on a bank line of credit.
    Read More