ECONOMICS
FINANCIAL MARKETS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Call Money
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Commercial Paper
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Treasury Bill
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Commercial Bill
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Detailed explanation-1: -Answer. To meet the floatation cost company can use commercial paper as a money market instrument. its duration is 3 months to 12 months . it helps to cover flotation cost which is known as bridge financing .
Detailed explanation-2: -5] Certificate of Deposits These are money market instruments issued only by commercial banks and financial institutions (under the guidelines of the RBI). They are like a promissory note, but can also be issued in a demat form.
Detailed explanation-3: -What Is a Flotation Cost? Flotation costs are incurred by a publicly-traded company when it issues new securities and incurs expenses, such as underwriting fees, legal fees, and registration fees. Companies must consider the impact these fees will have on how much capital they can raise from a new issue.
Detailed explanation-4: -Treasury Bills (T-Bills) Certificate of Deposits (CDs) Commercial Papers (CPs) Repurchase Agreements (Repo) Banker’s Acceptance (BA)