Question : Assertion: Commercial paper is a short-term debt instrument issued by corporations.
Reason: Commercial paper is often used to meet short-term financing needs.
Option 1: Both assertion and reason are true, and the reason is the correct explanation of the assertion.
Option 2: Both assertion and reason are true, but the reason is not the correct explanation of the assertion.
Option 3: Assertion is true, but the reason is false.
Option 4: Assertion is false, but the reason is true.
Correct Answer: Both assertion and reason are true, and the reason is the correct explanation of the assertion.
Solution : The correct answer is (a) Both assertion and reason are true, and the reason is the correct explanation of the assertion.
The assertion is true. Commercial paper is indeed a short-term debt instrument typically issued by corporations and sometimes financial institutions. It's a form of unsecured, short-term borrowing used by companies to finance short-term liabilities.
The reason is true and provides the correct explanation for the assertion. Commercial paper is often used by companies to meet their short-term financing needs, such as funding day-to-day operational expenses, managing cash flow, or addressing short-term liabilities.
Question : Assertion: Commercial paper is issued by financial institutions to raise short-term funds.
Reason: Commercial paper is a type of long-term debt instrument.
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