Which of the Following Statements Is False

question 24

Multiple Choice

Which of the following statements is false?

• A) Unlike long-term debt, because of its short maturity, commercial paper is not rated by credit rating agencies.
• B) The interest on commercial paper is typically paid by selling it at an initial discount.
• C) Commercial paper is short-term, unsecured debt used by large corporations that is usually a cheaper source of funds than a short-term bank loan.
• D) Extending the maturity of commercial paper beyond 270 days triggers a registration requirement with the Securities and Exchange Commission (SEC), which increases issue costs and creates a time delay in the sale of the issue.

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Definitions:

Dodd-Frank Act

A comprehensive financial reform legislation enacted in 2010 in the United States, aimed at reducing risks in the financial system and protecting consumers.

Antifraud Provisions

Regulatory measures designed to protect investors by preventing fraudulent trading practices and securities fraud.

Securities Acts

Collectively refers to federal laws, such as the Securities Act of 1933 and the Securities Exchange Act of 1934, regulating the securities industry in the U.S.

Documentary Letter of Credit

A bank's promise to pay the seller on behalf of the buyer upon receipt of specified documents, typically used in international trade.