CFA Level I · CFA Level I Exam · Fixed-Income Markets for Corporate Issuers
A company needs to borrow for general working capital for about six months and wants a flexible, unsecured instrument sold to investors in the money market at a discount. The company is most likely to issue:
The company would most likely issue commercial paper. It is a short-term, unsecured, discount money market instrument used to fund working capital needs, usually maturing within a year, which fits a six-month borrowing need better than longer-term notes or debentures.
- Acommercial paperCorrect
- Ba medium-term note
- Ca ten-year debenture
Explanation
Commercial paper is short-term, unsecured and issued at a discount to fund working capital, typically with maturities up to one year. Medium-term notes and ten-year debentures are longer-term capital market instruments.
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