Banker’s acceptances are financial assets sold by a company directly t

Banker’s acceptances are financial assets sold by a company directly to investors, like bonds and common stock, but with very short maturity dates, while commercial paper is for self-liquidating inventories.

Indicate whether the statement is true or false.

ANSWER

Answer: FALSE
Explanation: COMMERCIAL PAPER is a financial asset sold by a company directly to investors, like bonds and common stock, but with very short maturity dates. BANKER’S ACCEPTANCES are for self-liquidating inventories. For example, a car dealer may finance imports with a banker’s acceptance. As the import cars are sold and generate cash flow, the car dealer pays off the loan.