Q.Distinguish between Commercial Paper and Certificate of Deposit.

Commercial Paper and Certificates of Deposit are structurally very similar instruments, differing mainly in who is allowed to issue them. …

Commercial Paper (CP) is an unsecured, short-term promissory note issued by large, financially sound companies (and some financial institutions) to raise working-capital funds directly from investors, generally at a lower cost than a bank loan. Being unsecured, it is issued only by highly creditworthy, well-rated corporates.

Certificate of Deposit (CD) is an unsecured, negotiable instrument issued by commercial banks (and certain financial institutions) in exchange for a deposit of funds for a fixed period — essentially a bank's own equivalent of commercial paper. Like CP, a CD is issued at a discount and redeemed at face value. …

Assuming CP and CD are the same instrument under two names — they are structurally similar (both unsecured, discounted, short-term), but …