BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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170 days
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270 days
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120 days
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5 days
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Detailed explanation-1: -UPSC Mains. Notes: Commercial paper, in the global financial market, is an unsecured promissory note with a fixed maturity of not more than 270 days.
Detailed explanation-2: -Most commercial papers (CP) are issued under Section 3(a)(3) of the 1933 Act which exempts short-term securities from registration requirements as long as they have certain characteristics. The maturity of CP must be less than 270 days.
Detailed explanation-3: -Commercial paper is an exempt security under the Securities Act of 1933. It does not have to be registered and sold with a prospectus if its maturity is 270 days or less. This makes it much less expensive for an issuer to market the securities, since the regulatory burden is much lower.
Detailed explanation-4: -Commercial paper is issued by a firm to raise funds for a short period of time, the time can be ranging from 90 days to 364 days after which it has to be redeemed.