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Which of the following is/are issued in the form of usance promissory notes, hence negotiable instruments?
  • a)
    Commercial paper
  • b)
    Certificate of deposit
  • c)
    Demand promissory note
  • d)
    Both (1) and (2)
  • e)
    Both (1) and (3)
Correct answer is option 'D'. Can you explain this answer?
Most Upvoted Answer
Which of the following is/are issued in the form of usance promissory...
Commercial paper is issued in the form of usance promissory note by the blue chip corporates for raising funds from money markets where banks can invest when they have excess liquidity due to lesser demand for credit. Banks can earn negotiated interest, which is more than that can be earned from government securities (Sec 4 of N.I. Act).
Certificate of deposit is issued by banks and FIs in the form of usance promissory note where public business entities can invest. It is issued in the form of usance promissory note (Sec 4 of N.I. Act).
(Both are of minimum period 7 days and maximum period 364 days.)
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Which of the following is/are issued in the form of usance promissory notes, hence negotiable instruments?a)Commercial paperb)Certificate of depositc)Demand promissory noted)Both (1) and (2)e)Both (1) and (3)Correct answer is option 'D'. Can you explain this answer?
Question Description
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