Which of the Following Statements Regarding Commercial Paper Is FALSE

question 47

Multiple Choice

Which of the following statements regarding commercial paper is FALSE?

• A)With dealer paper,dealers sell the commercial paper to investors in exchange for a spread (or fee)for their services.
• B)With dealer paper,the spread increases the proceeds that the issuing firm receives,thereby decreasing the effective cost of the paper.
• C)The minimum face value is $25,000,and most commercial paper has a face value of at least $100,000.
• D)With direct paper,the firm sells the security directly to investors.

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Definitions:

Intent

A purpose or plan that guides an action, representing an individual's determined objective or desired goal.

Accelerated Depreciation

An accounting method that allows for the allocation of larger depreciation amounts in the initial years of an asset's life, reducing its taxable income.

Capital Funds

Capital funds are financial resources that a company or organization uses for long-term investment, expansion, and operational purposes.

Opportunity Costs

The cost of an alternative that must be forgone to pursue a certain action. Put differently, the benefits you could have received by taking an alternative action.