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:

Marginal Cost Curve

A graphical representation that shows how the cost of producing one additional unit of a good varies with the quantity produced.

Total Variable Costs

The total of all costs that vary with the level of production, including materials, labor, and other expenses that change with output.

Units of Output

The quantity of product that a company produces in a given period.

Marginal Costs

The increase in total production cost that arises from producing one additional unit of a good or service.