Question : Case Study 10:
PQR Ltd. is an established company planning to expand its global operations through strategic alliances.
Question :
To fund its strategic alliance efforts, PQR Ltd. is evaluating short-term financing options. Which money market instrument might it use?
Option 1: Commercial paper
Option 2: Equity share
Option 3: Call money
Option 4: Corporate bond
Correct Answer:
Commercial paper
Solution : The correct answer is (a) Commercial paper
Commercial paper is a short-term money market instrument used by corporations to raise funds for short-term financing needs. It is an unsecured, short-term debt instrument issued by corporations, including established companies like PQR Ltd., to meet short-term funding requirements. In the context of funding strategic alliance efforts, using commercial paper can provide PQR Ltd. with quick and efficient access to funds in the short term.
