Question : It is used for bridge financing. Which money market instrument is highlighted in the given statement?
Option 1: Treasury bill
Option 2: Commercial paper
Option 3: Call money
Option 4: Commercial bill
Answer (1)
23rd Jan, 2024
Correct Answer: Commercial paper
Solution : A company wants long term finance through shares or debentures. For this companies will have to incur floatation cost such as brokerage cost of issues prospectus etc. Commercial paper is used to meet such flotation costs. This is known as Bridge financing.
Hence, option B is correct.
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