A large, wellestablished company with an impeccable financial record considers borrowing money to meet its shortterm financing needs. The company hopes to borrow money using _____ since this form of financing typically carries a lower interest rate than that charged by commercial banks.
A) corporate bonds
B) factoring
C) commercial paper
D) trade credit

Question

A large, well­established company with an impeccable financial record considers borrowing money to meet its short­term financing needs. The company hopes to borrow money using _____ since this form of financing typically carries a lower interest rate than that charged by commercial banks.
A) corporate bonds
B) factoring
C) commercial paper
D) trade credit

Quizplus · Accepted Answer

Commercial paper is a short-term unsecured promissory note issued by large corporations to borrow money to meet their short-term financing needs. It is often issued at a discount to its face value and typically has a maturity of less than 270 days. Since large, well-established companies with impeccable financial records are considered to have a lower credit risk, they can borrow money at a lower interest rate through the issuance of commercial paper.

A Large, Well­established Company with an Impeccable Financial Record Considers

A Large, Wellestablished Company with an Impeccable Financial Record Considers