Which of the Following Is a Characteristic of Commercial Paper

question 76

Multiple Choice

Which of the following is a characteristic of commercial paper?

• A) issued by large firms
• B) one-to-two year maturity
• C) rates are usually above prime rates on business loans
• D) issued by small firms

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Definitions:

Tax Rate

The part of an individual's or corporation's earnings that is subject to taxation.

Debt-Equity Ratio

The ratio indicating a corporation's reliance on debt financing, found by dividing its total debts by the equity held by its shareholders.

After-Tax Cost of Debt

The net cost of debt after accounting for the effects of taxes, reflecting the actual cost to a company.

Cost of Equity

The theoretical compensation paid by a company to its equity investors, or shareholders, for the risk involved in investing their capital.