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Business Studies

Classification of Funds Based on Time Period

Commercial pa...

Question

Commercial papers represent a new financial instrument issued for the purpose of _______________.

A

Project financing

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B

Working capital

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C

Leasing of plant and equipment

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D

Import of capital goods

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Solution

The correct option is B Working capital
Commercial papers are short-term debt, unsecured instrument which is issued by the companies to meet their short term obligations that is to meet their working capital requirements. They are usually issued for 15 days to 1 year.

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