Question : Assertion: A Commercial Bill is a short-term negotiable instrument.
Reason: Commercial bills are used for long-term financing of trade transactions.
Option 1: Both assertion and reason are true, and the reason is the correct explanation of the assertion.
Option 2: Both assertion and reason are true, but the reason is not the correct explanation of the assertion.
Option 3: Assertion is true, but the reason is false.
Option 4: Assertion is false, but the reason is true.
Correct Answer: Assertion is true, but the reason is false.
Solution : The correct answer is (c) Assertion is true, but the reason is false.
The assertion is true. A Commercial Bill is indeed a short-term negotiable instrument used in trade transactions.
The reason is false. Commercial bills are used for short-term financing of trade transactions, not long-term. They typically have a short tenure, usually ranging from 30 to 180 days, making them short-term instruments. Therefore, the reason does not correctly explain the assertion.
Question : Assertion: Commercial paper is a short-term debt instrument issued by corporations.
Reason: Commercial paper is often used to meet short-term financing needs.
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