One major disadvantage of commercial paper is that if the company's credit quality declines, refinancing existing commercial paper might be impossible to achieve through a new issue of commercial paper.

Question

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This is a true statement. Commercial paper relies heavily on companies' credit quality and if it declines, it may be difficult to refinance existing commercial paper through a new issue. This can lead to a default on the commercial paper, which can have negative consequences for both the company and investors.

One Major Disadvantage of Commercial Paper Is That If the Company's