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(i) What is a Commercial Paper? (ii) State and explain the advantages of using commercial paper by businesses to raise funds

(i) What is a Commercial Paper?

(ii) State and explain the advantages of using commercial paper by businesses to
raise funds

Answers

(i) A commercial paper is unsecured short term financial instrument issued at a discount by
financially stable and sound firm to raise short term funds.

(ii) Advantages of commercial paper.
- Cheap source of funds (low interest rate)
- Improves credit rating of borrower
- Conserves long term sources of funds and attracts other sources of finance.

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marto answered the question on February 8, 2019 at 05:01

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