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AICPA Exam CPA-Business Topic 3 Question 33 Discussion
Actual exam question for
AICPA's
CPA-Business exam
Question #: 33
Topic #: 3
[All CPA-Business Questions]
Topic #: 3
Which one of the following responses is not an advantage to a corporation that uses the commercial paper market for short-term financing?
Suggested Answer:
B
Choice 'b' is correct. There are restrictions as to the type of corporation that can enter into the commercial paper market for short-term financing, since the use of the open market is restricted to a comparatively small number of the most credit-worthy large corporations.
The commercial paper market:
A Avoids the expense of maintaining a compensating balance with a commercial bank.
C Provides a broad distribution for borrowing.
D Accrues a benefit to the borrower because its name becomes more widely known.
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