[amp_mcq option1=”Equity shares” option2=”Preference shares” option3=”Commercial papers” option4=”Reserves and surplus” correct=”option3″]
The correct answer is C. Commercial papers.
Equity shares, preference shares, and reserves and surplus are all sources of long-term finance. Commercial papers are a type of short-term debt instrument.
Equity shares are a type of security that represents ownership in a company. When you buy equity shares, you become a part-owner of the company. Equity shares are considered to be a long-term source of finance because they do not have a maturity date.
Preference shares are a type of security that ranks above equity shares in terms of priority of payment in the event of liquidation. Preference shares also have a fixed dividend, which is paid out before any dividends are paid to equity shareholders. Preference shares are considered to be a long-term source of finance because they do not have a maturity date.
Reserves and surplus are accumulated profits that a company has not distributed to shareholders. Reserves and surplus can be used to finance long-term projects, such as the construction of a new factory.
Commercial papers are a type of short-term debt instrument that is issued by companies to raise cash. Commercial papers are typically issued with a maturity of 30, 60, or 90 days. Commercial papers are considered to be a short-term source of finance because they have a maturity date.