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
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.
Option 1: Fixed maturity period
Option 2: High liquidity
Option 3: Low interest rate
Option 4: No credit risk
Question : Which of the following is a feature of a commercial bill?
Option 1: Low credit risk
Option 2: High interest rate
Option 3: Fixed maturity period
Option 4: No collateral required
Question : Which of the following is a feature of a certificate of deposit (CD)?
Option 1: High liquidity
Option 2: Low interest rate
Question : Which of the following is a feature of a treasury bill?
Option 1: High credit risk
Option 4: No liquidity risk
Question : Which of the following is a feature of a money market instrument?
Option 2: long maturity period
Option 3: Low liquidity
Option 4: Low interest rate
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