Question : Statement 1: Commercial paper is a widely used instrument for long-term financing by companies.
Statement 2: Commercial paper offers high interest rates compared to other money market instruments.
Option 1: Statement 1 is true, and statement 2 is true.
Option 2: Statement 1 is true, but statement 2 is false.
Option 3: Statement 1 is false, and statement 2 is true.
Option 4: Statement 1 is false, and statement 2 is false.
Correct Answer: Statement 1 is false, and statement 2 is true.
Solution : The correct answer is (c) Statement 1 is false, and statement 2 is true.
Statement 1 is false. Commercial paper is a short-term debt instrument, typically with maturities ranging from a few days to a year. It is used for short-term financing needs, not long-term.
Statement 2 is true. Commercial paper typically offers higher interest rates compared to other money market instruments like Treasury bills or certificates of deposit, mainly due to its short-term nature and higher risk.
Related Questions
Trending Articles/News
