Which of the following is a source of long term funds?
Sources of FinanceLONG TERM SOURCES OF FINANCE / FUNDSMEDIUM TERM SOURCES OF FINANCE / FUNDSShare Capital or Equity SharesPreference Capital or Preference SharesPreference Capital or Preference SharesDebenture / BondsRetained Earnings or Internal AccrualsLease FinanceDebenture / BondsHire Purchase Finance4
What is an example of commercial paper?
An example of commercial paper is when a retail firm is looking for short-term funding to finance some new inventory for an upcoming holiday season. This interest rate can be adjusted for time, contingent on the number of days the commercial paper is outstanding.
Is commercial paper short term or long term?
Commercial paper is a short-term, unsecured debt instrument with a duration of 1-270 days. Financial institutions and large corporations are the main issuers of commercial paper because they have high credit ratings.
Which of the following are advantages of using commercial paper?
Advantages of commercial papers: 1) It is quick and cost effective way of raising working capital. 3) It provides the exit option to the investors to quit the investment. 4) They are cheaper than a bank loan. 5) As commercial papers are required to be rated, good rating reduces the cost of capital for the company.
What kinds of firms use commercial paper?
Commercial paper is issued by a wide variety of domestic and foreign firms, including financial companies, banks, and industrial firms. Major investors in commercial paper include money market mutual funds and commercial bank trust departments.
Are commercial papers tradable?
Commercial papers are securities issued by companies—in particular, large enterprises—to raise resources for their financial needs. They are tradable on the money market, and their maturity is generally between 1 and 9 months.