Banker's acceptances are financial assets sold by a company directly to investors, like bonds and common stock, but with very short maturity dates, while commercial paper is for self-liquidating inventories
Indicate whether the statement is true or false.
Answer: FALSE
Explanation: COMMERCIAL PAPER is a financial asset sold by a company directly to investors, like bonds and common stock, but with very short maturity dates. BANKER'S ACCEPTANCES are for self-liquidating inventories. For example, a car dealer may finance imports with a banker's acceptance. As the import cars are sold and generate cash flow, the car dealer pays off the loan.
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Of the following different types of securities, which is typically considered most risky?
A) common stocks of small companies B) long-term government bonds C) common stocks of large companies D) long-term corporate bonds
Why might you consider investing in bonds?
A) Bonds reduce risk through diversification. B) Bonds produce steady income. C) Bonds can be safe investment if held to maturity. D) All of the above