Question

A company requires fund for modernisation of its plant and the estimated cost is Rs. 8 crore. The finance manager wishes to issue equity shares for this purpose. It was ascertained that Rs.1 5 lakhs may be required to meet flotation cost of the issue. The company did not have the cash or bank balance to bear this cost although it has high profit. Identify the market and explain the instrument which the company will use to raise funds for flotation cost.​

Answer 1

Answer:

money market :- it is the form of market which deals In short term finance

if the company wants to meet the flotation cost to be incurred on issuing the securities then it has to issue the "COMMERCIAL PAPER"