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Checking Commercial Paper
(See first Commercial Paper)
Source: Encyclopedia of Banking & Finance (9h Edition) by Charles J Woelfel
(We recommend this as work of authority.)

Among banks in the larger cities a considerable amount of commercial paper is bought for investment.  Since at least one-half of commercial paper is one-name paper, its strength depends upon the financial responsibility and assets of the maker as disclosed by the financial statement.  For this reason the note broker selling commercial paper is required to furnish a current statement of his or her client's business.  The credit department of a bank in considering the purchase of commercial paper must conduct an investigation, i.e., "check" the paper.

An investigation leading to a recommendation of purchase must show a favourable condition as disclosed by the analysis of a recent statement; favourable reports from other banks which have had experience with the name in question; favourable reports from the trade, preferably several creditors and debtors and a competitor; and favourable mercantile agency reports.  

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