(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.

---

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

Next: i) What is a stock exchange index? (ii) Outline four drawbacks of the Nairobi Stock Exchange...
Previous: Describe in brief the greatest difficulties faced in capital budgeting in the real world.

View More CPA Financial Management Questions and Answers | Return to Questions Index

Exams With Marking Schemes

• Grade 1
• Grade 2
• Grade 3
• Grade 4
• Grade 5
• Grade 6
• Grade 7
• Grade 8
• Grade 9
• PP1
• PP2
• Playgroup
• Form 1
• Form 2
• Form 3
• Form 4

Related Questions

• i) What is a stock exchange index? (ii) Outline four drawbacks of the Nairobi Stock Exchange...(Solved)
  

  i) What is a stock exchange index?
  
  (ii) Outline four drawbacks of the Nairobi Stock Exchange index

  Date posted: February 8, 2019.  Answers (1)

• You are given the following price quotations on a Treasury Bond for the close of trading on May 31 and June 30, 2000. As on June...(Solved)
  

  You are given the following price quotations on a Treasury Bond for the close of
  trading on May 31 and June 30, 2000. As on June 30 this Treasury Bond has a 90-day
  remaining life.
  
  
  
  (i) On May 31, the Treasury Bond had a 120-day remaining life. On that day what
  percentage of par value would you pay to purchase the Treasury Bond?
  
  (ii) Assume you purchased the Treasury Bond on May 31 and later sold it on June
  30. What rate of return did you earn during this one-month period

  Date posted: February 7, 2019.  Answers (1)

• Explain how the Capital Authority can ensure: (i) faster growth and development of the Nairobi Stock Exchange or Stock Exchange in your country. (ii) development of other...(Solved)
  

  Explain how the Capital Authority can ensure:
  
  (i) faster growth and development of the Nairobi Stock Exchange or Stock
  
  Exchange in your country.
  
  (ii) development of other stock exchanges in Kenya or in your country.

  Date posted: February 7, 2019.  Answers (1)

• What economic advantages are created by the existence of: (i) Primary markets. (ii) Secondary markets (iii) Portfolio management firms(Solved)
  

  What economic advantages are created by the existence of:
  
  (i) Primary markets.
  
  (ii) Secondary markets
  
  (iii) Portfolio management firms

  Date posted: February 7, 2019.  Answers (1)