A Firm Issues Two-Month Commercial Paper with $1,000,000 Face Value

question 74

Multiple Choice

A firm issues two-month commercial paper with $1,000,000 face value and receives $985,000. What is the EAR the firm is paying for these funds?

• A) 1.52%
• B) 7.50%
• C) 9.49%
• D) 15.00%

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Definitions:

Opinion Letter

A document issued by an auditor after the completion of auditing financial statements. This letter expresses whether the audit has been performed in compliance with Generally Accepted Auditing Standards (GAAS) and whether, in the auditor’s opinion, the financial statements fairly present the client’s financial position and results of operations in conformity with Generally Accepted Accounting Principles (GAAP).

Auditor's Opinion

A formal statement by an auditor, after reviewing an organization's financial statements, regarding the fairness and accuracy of those statements.

LLP

A limited liability partnership, a business structure that offers its owners protection from personal liability for debts or legal actions against the business.

Limited Liability Partnerships

A business structure where partners have limited liabilities, protecting each partner's personal assets from the debts and liabilities of the partnership.