FINRA Practice Exam 2025 – All-in-One Guide to Succeed in Financial Industry Certification!

Promissory notes are primarily considered a form of short-term debt instrument, and in this context, they relate closely to commercial paper issued by corporations. Commercial paper is an unsecured, short-term debt instrument that companies use to finance their immediate cash flow needs, such as payroll or inventory purchases. These instruments typically have maturities that range from a few days to up to 270 days, making them a viable option for companies seeking to manage their short-term financing requirements.

In contrast, other listed choices do not align with the definition of promissory notes. Treasury notes and Treasury bills are government-issued debt securities that are used to fund government operations, while jumbo CDs are large denomination certificates of deposit offered by banks, which represent time deposits rather than flexible promissory obligations. Therefore, commercial paper being categorized as promissory notes reflects its nature as a negotiable instrument that represents a promise to pay a specified amount to the holder at a set time.