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Question : Which of the following is a feature of a commercial paper?

 

Option 1: Low liquidity

Option 2: High credit rating requirement

Option 3: High interest rate

Option 4: No fixed maturity period


Team Careers360 15th Jan, 2024
Answer (1)
Team Careers360 25th Jan, 2024

Correct Answer: No fixed maturity period


Solution : The correct answer is (d). No fixed maturity period

Commercial paper (CP) is a short-term debt instrument issued by corporations, financial institutions, and other eligible entities to raise funds for their short-term financing needs.

No fixed maturity period One of the distinctive features of commercial paper is that it does not have a fixed maturity period. It is issued with a maturity that ranges from a few days to several months, but it does not have a predetermined maturity date like other fixed-term debt instruments.

Commercial paper offers flexibility in terms of maturity, allowing issuers to tailor the issuance to their specific funding requirements and investors to choose maturity options that align with their investment strategies.

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