[amp_mcq option1=”it is an unsecured money market instrument issued in the form of promissory note” option2=”the highly rated corporate borrowers can raise short-term funds through this instrument” option3=”it is an additional instrument to the investing community” option4=”All of the above” correct=”option4″]
The correct answer is: D. All of the above.
Commercial paper is an unsecured, short-term promissory note issued by a company to raise money. It is a popular form of financing for companies with good credit ratings, as it is a relatively inexpensive way to borrow money. Commercial paper is typically issued with maturities of 30, 60, or 90 days, but can be issued with maturities as long as 270 days.
Commercial paper is a relatively safe investment for investors, as it is backed by the creditworthiness of the issuing company. However, there is always some risk of default, so investors should carefully consider the credit rating of the issuer before investing.
Commercial paper is an important source of short-term financing for companies, and it plays a vital role in the money markets. It is an additional instrument to the investing community, and it provides investors with a way to earn a higher return on their money than they would with traditional bank deposits.
Here is a brief explanation of each option:
- Option A: Commercial paper is an unsecured money market instrument issued in the form of promissory note. This means that it is not backed by any collateral, such as a mortgage or a car loan. Instead, the only thing that backs commercial paper is the creditworthiness of the issuing company.
- Option B: The highly rated corporate borrowers can raise short-term funds through this instrument. Commercial paper is a popular form of financing for companies with good credit ratings, as it is a relatively inexpensive way to borrow money.
- Option C: It is an additional instrument to the investing community. Commercial paper is an important source of short-term financing for companies, and it plays a vital role in the money markets. It is an additional instrument to the investing community, and it provides investors with a way to earn a higher return on their money than they would with traditional bank deposits.