New Enroll in RBI Grade B New Batch - Starts on May 21

    Question

    Consider the following statements about Commercial

    Paper? I. It was introduced in India in 1900. II. It is an unsecured money market instrument. III. It is a type of short-term borrowing. Which of the following statements is/are correct?
    A I Correct Answer Incorrect Answer
    B II Correct Answer Incorrect Answer
    C III Correct Answer Incorrect Answer
    D All are correct Correct Answer Incorrect Answer
    E None of the statements are correct Correct Answer Incorrect Answer

    Solution

    Commercial Paper is an unsecured money market instrument issued in the form of a promissory note. Commercial Paper was introduced in India in 1990 with a view to enabling highly rated corporate borrowers to diversify their sources of short-term borrowings and to provide an additional instrument to investors. Commercial paper is a money-market security issued by large corporations to obtain funds to meet short-term debt obligations (for example, payroll) and is backed only by an issuing bank or company promise to pay the face amount on the maturity date specified on the note.  

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