CUET Preparation Today
Which is true in respect of commercial paper? |
These are short term upto 1 year These are unsecured promissory Notes These are negotiable and transferable by endorsement and delivery with a fixed maturity period All of the above |
All of the above |
The correct answer is option 4- All of the above. All of the above are about commercial paper.
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. |
