Question : It is used for bridge financing. Which money market instrument is highlighted in the given statement?
Option 1: Treasury bill
Option 2: Commercial paper
Option 3: Call money
Option 4: Commercial bill
Correct Answer: Commercial paper
Solution : A company wants long term finance through shares or debentures. For this companies will have to incur floatation cost such as brokerage cost of issues prospectus etc. Commercial paper is used to meet such flotation costs. This is known as Bridge financing.
Hence, option B is correct.
Question : Which money market instrument is highlighted in the given statement? Statement: This source of finance known as bridge financing.
Option 4: All of the above
Question : It is a short term finance repayable on demand it is used for interbank transactions. Which money market instrument is highlighted in the given statement?
Question : Which money market instrument is highlighted in the given statement? Statement: It is used to finish the credit sales.
Option 2: Call money
Option 3: Certificate of deposits
Question : It is an unsecured document with a fixed maturity period. Which money market instrument is highlighted in the given statement?
Question : It is an negotiable promissory note with the fixed maturity period. Which money market instrument is highlighted in the given statement?
Regular exam updates, QnA, Predictors, College Applications & E-books now on your Mobile