Which of the following is not a source of long-term finance?

Equity shares
Preference shares
Commercial papers
Reserves and surplus

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.

Exit mobile version