Which of the following statements is CORRECT?
A) Commercial paper is a form of short-term financing that is primarily used by large, strong, financially stable companies.
B) Short-term debt is favored by firms because, while it is generally more expensive than long-term debt, it exposes the borrowing firm to less risk than long-term debt.
C) Commercial paper can be issued by virtually any firm so long as it is willing to pay the going interest rate.
D) Commercial paper is typically offered at a long-term maturity of at least five years.
E) Trade credit is provided only to relatively large, strong firms.

Question

Quizplus · Accepted Answer

Commercial paper is indeed a short-term financing tool that is primarily utilized by large, financially stable companies. This is because it is an unsecured form of borrowing, and only firms with a high credit rating can afford to issue it at competitive rates.

Which of the Following Statements Is CORRECT