Which of the following is not true in respect of commercial papers?

Both option 1 and 2

The correct answer is option 4- Both option 1 and 2.

Both option 1 and 2 are not true.

OPTION 1- These are non- negotiable and transferable by endorsement and delivery with a fixed maturity period- This is not true as it is negotiable instrument.

OPTION 2- It is issued by Banks and Financial Institutions to raise short-term funds- This is not true as it is issued by large and creditworthy companies.

Commercial paper is a short-term unsecured promissory note, negotiable and transferable by endorsement and delivery with a fixed maturity period. It is issued by large and creditworthy companies to raise short-term funds at lower rates of interest than market rates. It usually has a maturity period of 15 days to one year. The issuance of commercial paper is an alternative to bank borrowing for large companies that are generally considered to be financially strong. It is sold at a discount and redeemed at par. The original purpose of commercial paper was to provide short-terms funds for seasonal and working capital needs.