Which statement concerning commercial paper is NOT true?
A)Commercial paper generally carries an interest rate below the prime rate.
B)Commercial paper is sold to money market mutual funds, as well as to other financial institutions and nonfinancial corporations.
C)Commercial paper can be issued by virtually any firm so long as it is willing to pay the going interest rate.
D)Commercial paper is a type of unsecured promissory note issued by relatively large, strong firms.

Question

Quizplus · Accepted Answer

Commercial paper is typically issued by corporations that have a high credit rating because it is an unsecured form of borrowing. Firms without a strong credit rating may find it difficult or impossible to issue commercial paper, regardless of the interest rate they are willing to pay.

Which Statement Concerning Commercial Paper Is NOT True