SSC Economics Sample Paper NCERT Sample Paper-5

  • question_answer
    Which of the following is the correct definition of the term 'Commercial Paper'?

    A)  It is nothing but the popular name of the judicial stamp papers used to register financial transactions

    B)  It is one of the instruments through which corporate raise debts from the market

    C)  It is the name of the 'Certificate of Deposits' provided by the bank to all its retail customers

    D)  All of the above

    Correct Answer: B

    Solution :

    [b] Commercial paper is an unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories and meeting short-term. Commercial paper is not usually backed by any form of collateral, so only firms with high-quality debt ratings will easily find buyers without having to offer a substantial discount (higher cost) for the debt issue.

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