interest rates and maturities. When investors shows interest, the issuer is contacted and the deal is finalized and confirmed. Options When issuing the MTN, the issuer can include call or put option in the program. With call options, the debtor have a right to repay the principal earlier than at its maturity. In case of decrease of the market interest rates the businesses can repay the old notes and issue new ones at the lower rates. As this represents significant increase in risk for the investors, it may result in higher interest rates for these notes. On the other hand, put options guarantees investors possibility to redeem the principal before the maturity (at some specific point of time), which leads to lower interest rates. Offering size The offering size plays a significant role in cost differentiating between MTNs and standard corporate bonds. For large issues, the interest and underwriting costs for issuer may be lower for corporate bonds, due to economies of scale in underwriting and its greater liquidity. However, for smaller sizes, this liquidity premium would be insignificant and the economies of scale would have opposite effect. Moreover, the MTN distribution process allows the issuer price discriminate, by splitting the desired amount into smaller issues and negotiate a separate interest rates and maturities for each issue. This may lead to lower financing costs than in case of raising the whole amount at one interest rate. This, together with the possibility of continuous offering, may play a significant role in choosing, which instrument to use for financing. Advantages The rates of return on MTNs are usually higher than on other short-term investments. These notes are custom defined case by case and can be tailored to both issuers and investors needs (within legal requirements). For investors, it may serve as a compromise investment opportunity between short-term investments and bonds with long maturities. Availability to raise the funds non-publicly. Disadvantages Higher costs of servicing Due to strict issuance documentation requirements, issuers may prefer issuing public bonds instead. History MTNs were first put into use in 1970s, when the General Motors Acceptance Corporation (GMAC) needed to issue debt with maturity matching to the car loans provided to dealerships and consumers. The commercial papers were not suitable, as their maturities cannot exceed 270 days and the underwriting costs of bond offering were too high for short maturities to be practical. GMAC thus began to