Commercial paper is best described as:
Correct answer: D. Unsecured short-term debt issued by creditworthy companies
- A. Long-term secured debt issued by governments
- B. A bank deposit held for a fixed period
- C. Preference shares issued to existing shareholders
- D. Unsecured short-term debt issued by creditworthy companies
Explanation
Commercial paper consists of unsecured short-term promissory notes issued mainly by financially strong companies. It is used to meet short-term financing needs rather than to raise permanent capital.
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