What Is the Term Used for a Short-Term, Unsecured Debt

question 6

Multiple Choice

What is the term used for a short-term, unsecured debt sold by a large company to an intermediary, who then resells the debt to investors in return for a fee for his or her services?

• A) commercial paper
• B) direct paper
• C) dealer paper
• D) unsecured paper

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Definitions:

Unamortized Discount

The portion of a bond issuance discount that has not yet been expensed to interest over the bond’s life.

Journal Entry

A record in accounting that notes the details of a financial transaction.

Face Value

The nominal value of a security stated by the issuer, which is the amount to be repaid at maturity in the case of a bond or the value represented by each share of stock.

Retired Bonds

Bonds that have been paid off or bought back by the issuer before or at maturity, effectively removing them from existence and relieving the issuer of further obligations.