Which characteristic is associated with commercial paper?

Commercial paper is a short-term debt instrument issued by corporations to finance their immediate operational needs, and it is typically issued at a discount to face value. The key characteristic of commercial paper is that it has a fixed maturity date, and repayment of the principal amount occurs in a lump sum at the end of the contract term. This aligns with the function of commercial paper as a means of raising short-term capital quickly.

The nature of commercial paper means that it does not involve periodic interest payments like bonds do; instead, the return to investors is generated through the discount on the purchase price. The lack of installment repayment and monthly interest payments differentiates it from longer-term financing options. Additionally, commercial paper is usually unsecured and not backed by physical assets, but rather it is based on the issuer's creditworthiness and reputation in the market.

Given this understanding, identifying that repayment being due at the end of the contract best captures the essence of commercial paper.