Question : Assertion: Commercial paper is issued by financial institutions to raise short-term funds.
Reason: Commercial paper is a type of long-term debt instrument.
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. Commercial paper is indeed issued by financial institutions and other corporations to raise short-term funds.
The reason is false. Commercial paper is not a type of long-term debt instrument; it is a short-term debt instrument. It usually has a maturity period ranging from a few days to a few months, making it a short-term financing tool. Therefore, the reason does not correctly explain the assertion.
