Question

Which is an unsecured, short-term debt instrument issued by a company for meeting short-term liabilities?

A Debenture Correct Answer Incorrect Answer
B Bond Correct Answer Incorrect Answer
C Certificate of Deposit Correct Answer Incorrect Answer
D Commercial Paper Correct Answer Incorrect Answer
E Commercial Bill Correct Answer Incorrect Answer

Solution

Debentures: A long-term security bearing a fixed rate of interest and normally secured against assets. Bonds: It is an instrument of indebtedness of the bond issuer to the holders. Commercial Bills: A bill of exchange to raise money for short-term needs. Commercial Papers: An unsecured, short-term debt instrument issued for financing of accounts receivable, inventories and meeting short-term liabilities. Certificates of deposits (CD): A savings certificate entitling the bearer to receive interest.

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