Finance companies raise funds by
I. Attracting deposits
II. Issuing commercial paper
III. Issuing long-term securities

Question

Quizplus · Accepted Answer

Finance companies can raise funds by issuing commercial paper, which are short-term unsecured promissory notes, and long-term securities such as bonds. However, they can also attract deposits from customers, allowing them to lend out the funds at a higher interest rate, earning a profit on the difference between the interest they pay to depositors and the interest they earn from borrowers. Therefore, options II and III are correct. Option I is only applicable to depository institutions like banks and credit unions, not finance companies.

Finance Companies Raise Funds by