What is the duration for which the company can get funds through this instrument?

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Solution

The duration for which the company can get funds through this instrument is 15 days to 1 year.

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"Mission Coach" is a large creditworthy company manufacturing coaches for Indian Railways. It now wants to export these coaches to other countries and decides to invest in new hi-tech machines. Since the investment is large, it requires long-term finance. It decides to raise funds by issuing equity shares. The issue of equity shares involves huge floatation cost. To meet the expense of floatation cost, the company decides to tap the money market.

(i) Name and explain the money market instrument the company can use for the above purpose.

(ii) What is the duration for which the company can get funds through the instrument?

(iii) State any other purpose for which this instrument can be used.

Q. 'Mission Coach Ltd.' is a large and creditworthy company manufacturing coaches for Indian Railways. It now wants to export these coaches to other countries and decides to invest in new hi-tech machines. Since the investment is large, it requires long-term finance. It decides to raise funds by issuing equity shares. The issue of equity shares involves a huge flotation cost. To meet the expenses of the flotation cost, the company decides to tap the money market.
(a) Name and explain the money-market instrument the company can use for the above purpose.
(b) What is the duration for which the company can get funds through this instrument?
(c) State any other purpose for which this instrument can be used.

Q. What do we call the process in which an employee who serves the company for a long duration is replaced by another employee of shorter duration to get relief from heavy pressure?

[1 mark]

Q. A company can raise funds through issue of debentures, which bear a ________ rate of interest.

Q. Sources of funds for a short duration are ______________.

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