Which type of debt is typically short-term and unsecured, issued by large corporations?

Commercial paper is a financial instrument that represents a company's promise to pay a specific amount at a future date, typically used for short-term financing needs. It is issued by large corporations to cover immediate capital requirements, such as operational costs or inventory purchases. Being unsecured means that it is not backed by any form of collateral, which relies instead on the issuer's creditworthiness.

The primary characteristics of commercial paper include its short-term nature, generally maturing in a range from a few days to up to 270 days, and it is usually issued at a discount to face value. This feature appeals to investors looking for a low-risk, short-term investment opportunity. Companies with strong credit ratings can issue commercial paper at lower interest rates than traditional loans.

In contrast, bankers' acceptances involve a promise to pay backed by a bank, index-linked GICs are investment products that guarantee a return linked to an index and are not specifically short-term corporate debt, and preferred shares represent equity ownership in a company and typically come with dividend payments but do not possess the short-term debt characteristics of commercial paper.