It is a short-term, negotiable, self-liquidating instrument which is used to finance the credit sales of firms.
Which is being referred to here?
Answer & explanation
Correct answer: option 1
The correct answer is option 1- Commercial Bill.
A commercial bill is a bill of exchange used to finance the working capital requirements of business firms. It is a short-term, negotiable, self-liquidating instrument which is used to finance the credit sales of firms. When goods are sold on credit, the buyer becomes liable to make payment on a specific date in future.
OTHER OPTIONS
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.
Call Money- Call money is short-term finance repayable on demand, with a maturity period of one day to fifteen days, used for inter-bank transactions. Commercial banks have to maintain a minimum cash balance known as cash reserve ratio.
Bank Loans- A bank loan is a sum of money borrowed from a bank or financial institution that must be paid back with interest over a specified period.