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Commercial paper issued with low interest rate thus commercial paper are categorized as
- a)payables rating
- b)commercial rating
- c)poor credit rating
- d)better credit rating
Correct answer is option 'D'. Can you explain this answer?
Most Upvoted Answer
Commercial paper issued with low interest rate thus commercial paper a...
Commercial paper issued with low interest rate is categorized as better credit rating.
Explanation:
Commercial paper is a short-term debt instrument issued by companies to meet their short-term financial requirements. These are unsecured and negotiable promissory notes issued by companies for a period of up to 364 days.
Commercial paper is rated by credit rating agencies based on the issuer's creditworthiness. The rating reflects the issuer's ability to repay the debt on time and the risk associated with the investment. The rating agencies assign a rating based on the issuer's financial strength, business profile, and management quality.
The interest rate on commercial paper is determined by the rating assigned by the credit rating agency. The higher the rating, the lower the interest rate, and vice versa. Hence, commercial paper issued with a low-interest rate is considered to have a better credit rating.
Conclusion:
In conclusion, commercial paper issued with a low-interest rate is categorized as a better credit rating. The credit rating reflects the issuer's ability to repay the debt on time and the risk associated with the investment. Therefore, investors should consider the credit rating assigned by the credit rating agency before investing in commercial paper.
Explanation:
Commercial paper is a short-term debt instrument issued by companies to meet their short-term financial requirements. These are unsecured and negotiable promissory notes issued by companies for a period of up to 364 days.
Commercial paper is rated by credit rating agencies based on the issuer's creditworthiness. The rating reflects the issuer's ability to repay the debt on time and the risk associated with the investment. The rating agencies assign a rating based on the issuer's financial strength, business profile, and management quality.
The interest rate on commercial paper is determined by the rating assigned by the credit rating agency. The higher the rating, the lower the interest rate, and vice versa. Hence, commercial paper issued with a low-interest rate is considered to have a better credit rating.
Conclusion:
In conclusion, commercial paper issued with a low-interest rate is categorized as a better credit rating. The credit rating reflects the issuer's ability to repay the debt on time and the risk associated with the investment. Therefore, investors should consider the credit rating assigned by the credit rating agency before investing in commercial paper.
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