Which of the Following Is True of Commercial Paper

question 65

Multiple Choice

Which of the following is true of commercial paper?

• A)It is a secured long-term debt instrument issued by corporations.
• B)It is always issued via an underwriter.
• C)It may help a corporation to raise funds often at rates below those banks charge.
• D)All corporations can tap the commercial paper market.
• E)Total commercial paper outstanding in the US is smaller than total C&I loans.

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Definitions:

Operating Activity

Transactions and events related to the core business functions of an organization, such as sales and purchases of goods or services.

Financing Activities

Transactions and events that affect the long-term liabilities and equity of a company, such as issuing debt, repaying loans, or distributing dividends.

Issued Bonds Payable

Long-term liabilities representing borrowed funds that a company must repay to bondholders.

Paid Note Payable

The satisfaction or settlement of a debt instrument or promissory note through payment by the debtor to the lender according to the agreed terms.