Question : Which of the following is a feature of a commercial paper?
Option 1: Fixed maturity period
Option 2: High liquidity
Option 3: Low interest rate
Option 4: No credit risk
Correct Answer: High liquidity
Solution : The correct answer is (b) High liquidity is a feature of a commercial paper.
Commercial paper is a short-term debt instrument issued by corporations to meet their short-term funding needs. It typically has a maturity period of up to one year. One of the key features of commercial paper is its high liquidity. This means that commercial paper can be easily bought or sold in the secondary market before its maturity, allowing investors to convert it into cash quickly if needed. The high liquidity of commercial paper makes it an attractive investment for investors seeking flexibility and easy access to their funds.
