ECONOMICS
FINANCIAL MARKETS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Which of the following statements is not true with regard to Commercial paper?
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Is a long-term unsecured promissory note with a fixed maturity period.
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It usually has a maturity period of 15 days to one year.
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It is sold at a discount and redeemed at par.
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Companies use this instrument for bridge financing.
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Explanation:
Detailed explanation-1: -Which of the following statements is not true with regard to Commercial paper? It is a long-term unsecured promissory note with a fixed maturity period.
Detailed explanation-2: -The correct answer is 1 only. A Commercial Paper (CP) is an unsecured loan raised by firms in money markets through instruments issued in the form of a promissory note.
Detailed explanation-3: -Retained Earnings (profit) and Borrowed Funds.
Detailed explanation-4: -Commercial paper is an unsecured form of promissory note that pays a fixed rate of interest. It is typically issued by large banks or corporations to cover short-term receivables and meet short-term financial obligations, such as funding for a new project.
There is 1 question to complete.