Question : Case Study 1:
ABC Corporation is a well-established manufacturing company looking to optimize its short-term funding needs.
Question :
ABC Corporation is planning to issue a debt instrument with a maturity of 90 days. Which money market instrument should it consider?
Option 1: Treasury bill
Option 2: Corporate bond
Option 3: Equity share
Option 4: Debenture
Correct Answer: Treasury bill
Solution : The correct answer is (a) Treasury bill
For a 90-day maturity, ABC Corporation should consider issuing a Treasury bill. Treasury bills are short-term debt instruments issued by the government to raise funds for a specific period, usually ranging from a few days to one year. They are highly liquid and considered one of the safest investments as they are backed by the government. ABC Corporation can use Treasury bills to optimize its short-term funding needs due to the short maturity period and the safety associated with government securities.
Question : Case Study 13:
XYZ Corporation is a conglomerate planning to diversify its operations by entering the renewable energy sector.
XYZ Corporation is diversifying into the renewable energy sector. What type of financial instrument might it use to raise capital for this new venture?
Option 1: Commercial paper
Option 2: Equity share
Option 3: Debenture
Option 4: Treasury bill
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