SOFA-CFE · Question #78
In the financial community, unsecured promissory notes of corporations are known as:
The correct answer is A. commercial paper. Commercial paper (A) is the correct term for short-term, unsecured promissory notes issued by corporations to raise funds - typically maturing in 270 days or less and sold at a discount to institutional investors. Risk-based factors (B) are inputs used in calculating capital…
Question
In the financial community, unsecured promissory notes of corporations are known as:
Options
- Acommercial paper
- Brisk-based factors
- Crisk premiums
- Dunrealistic bonds
How the community answered
(27 responses)- A74% (20)
- B15% (4)
- C4% (1)
- D7% (2)
Explanation
Commercial paper (A) is the correct term for short-term, unsecured promissory notes issued by corporations to raise funds - typically maturing in 270 days or less and sold at a discount to institutional investors.
Risk-based factors (B) are inputs used in calculating capital requirements or credit risk models, not a type of debt instrument. Risk premiums (C) refer to the extra return investors demand for taking on additional risk - a concept, not a financial instrument. Unrealistic bonds (D) is not a real financial term at all and exists only as a distractor.
Memory tip: Think "commercial paper" = corporations doing paperwork to borrow money quickly without putting up collateral ("unsecured" = no security/collateral backing). The word commercial links directly to corporations.
Community Discussion
No community discussion yet for this question.