Sources of Business Finance · Class 11 · CBSE · Commerce Business Studies
A company requires funds for a short-term period of 30 days to meet unexpected working capital requirements. Which of the following instruments is mo…
Practice question from Sources of Business Finance (Class 11 · CBSE · Commerce Business Studies), with the correct answer and a step-by-step solution.
medium · MCQ · Q-1C2B53
A company requires funds for a short-term period of 30 days to meet unexpected working capital requirements. Which of the following instruments is most suitable for this purpose if it is issued at a discount and redeemed at par?
- A.Commercial PaperCorrect answer
- B.Cumulative Preference Shares
- C.Global Depository Receipt
- D.Redeemable Debentures
Solution
Commercial Paper (CP) is an unsecured promissory note issued by highly rated corporations for a short term, typically ranging from 7 days to a year, and is usually sold at a discount to face value.
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