Question

What are the merits of commercial paper?

Answer 1

$hey \: dear \: here \: is \: your \: answer$
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✯Merits of commercial paper (CP) :

➊. a commercial paper is sold on an unsecured basis and does not contain any restrictive conditions.


➋. as it is a freely Transferable instrument, it has high liquidity.



➌. it provides more funds compared to other sources.generally, the cost of commercial paper to the issuing firm is lower than the cost of commercial bank loans.

➍. commercial paper provides a continuous source of funds. this is because their maturity can be tailored to suit the requirements of the issuing firm. further measuring commercial paper can be repaid by selling new commercial paper.


☺$hope \: this \: helps \: you \:$
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Answer 2

heya...

Here is your answer..

1) It is quick and cost effective way of raising working capital.

2) Best way to the company to take the advantage of short term interest fluctuations in the market

3) It provides the exit option to the investors to quit the investment.

4) They are cheaper than a bank loan.

5) As commercial papers are required to be rated, good rating reduces the cost of capital for the company.

6) It is unsecured and thus does not create any liens on assets of the company.

7) It has a wide range of maturity

8) It is exempt from federal SEC and State securities registration requirements.

It may help you...☺☺