Bad Paper

Unsecured short-term fixed income instrument that is issued either by a corporation, city, state or country, that has a high probability of defaulting on their promissory notes. Since bad paper is not backed by collateral, it is sold at a discount to the equivalent collateral-backed fixed-income securities. However, in contrast to regular commercial paper which typically has a strong rating from a credit agency, bad paper does not possess this quality.

Bad paper is risky. Not only is it not backed by collateral, it is also issued by an entity that could potentially fail to meets its obligations. Bad-paper investors take on high levels of risk and, as a result, would be offered an attractive interest rate as proper compensation.


Investment dictionary. . 2012.

Look at other dictionaries:

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  • bad\ paper — noun slang 1. A check for which there are no funds in the bank. 2. Counterfeit paper money. Why are you so mad? I was paid with some bad paper …   Словарь американских идиом

  • bad paper — Slang. a less than honorable discharge from military service. * * * …   Universalium

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  • bad paper — Slang. a less than honorable discharge from military service …   Useful english dictionary

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  • paper over — ( ● paper * * * paper over [phrasal verb] paper (something) over or paper over (something) : to hide (something bad, such as differences or problems) They papered over their disagreements [=they pretended that they did not disagree] in order to… …   Useful english dictionary

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