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प्रश्न
What are the advantages and limitations of commercial paper?
उत्तर
Advantages of Commercial Paper
(a) The cost of issuing commercial paper is generally lower than the cost of securing commercial bank loans.
(b) It a highly liquid asset as it can be transferred to anyone at any time.
(c) Companies can invest their surplus funds in commercial paper and earn good returns on their investment.
(d) They provide a continuous source of finance to firms, as the maturing funds can be repaid by issuing fresh commercial paper.
Limitation of Commercial Paper
(a) Since commercial paper denotes unsecured securities, they can only be used by firms that have a strong market position. Therefore, new firms cannot raise money by issuing commercial paper.
(b) The amount of money that can be raised through the commercial paper is limited as it depends on the availability of funds with buyers at the time of its issue.
(c) The maturity period of commercial paper is fixed and ranges from 90 to 364 days. Therefore, if a firm is unable to redeem its commercial paper on time because of the unavailability of funds, then it cannot extend the time period of the commercial paper.
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संबंधित प्रश्न
Business finance deals with __________ activities of business.
Match the correct pairs of words from group 'A' and group 'B'.
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Group A
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Group B
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| (a) Retained profits. | (1) Share warrant holder | |
| (b) Small depositors |
(2) Borrowed capital
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| (c) Dividend coupon |
(3) Deposits less than Rs. 25000
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|
| (d) Returns on shares |
(4) Interest
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| (e) Bear | (5) Expects rise in price of security. | |
| (6) Ploughing back of profit | ||
| (7) Expects fall in price of securities. | ||
| (8) Deposits less than Rs. 20,000. | ||
| (9) Share certificate holder | ||
| (10) Dividend | ||
Multiple Choice Question:
Funds required for purchasing current assets is an example of ______
Multiple Choice Question:
ADRs are issued in
Multiple Choice Question:
Under the lease agreement, the lessee gets the right to
Multiple Choice Question:
The maturity period of a commercial paper usually ranges from
What is business finance?
List sources of raising long-term and short-term finance.
Discuss the sources from which a large industrial enterprise can raise capital for financing modernisation and expansion.
What is commercial paper?
Choose the Correct Answer.
Debenture holders are entitled to a fixed rate of _________
Choose the Correct Answer.
Equity shareholders are the __________
Define Business finance.
What is pledge?
Business firm gives green signal to the project only when it is profitable.
