Practicing Success
Read the following case study and answer questions. Company X raised 10,00,000 through issue of shares in open market to raise funds to establish the business of selling electronic goods. Later on for procuring funds for next six months, Company X was dependent on sources like commercial paper, and commercial bill. The issue of share done in open market was oversubscribed due to good reputation of company. These sources help the company to mobilise a large amount of money for long as well as short run. The business succeeded in its operations using these funds. |
Certificate of deposits are issued to individuals when demand for credit is |
High Low Medium Conservative |
High |
The correct answer is Option (1) - High Certificate of Deposit: Certificates of deposit (CD) are unsecured, negotiable, short-term instruments in bearer form, issued by commercial banks and development financial institutions. They can be issued to individuals, corporations and companies during periods of tight liquidity when the deposit growth of banks is slow but the demand for credit is high. They help to mobilise a large amount of money for short periods. |