SIE Exam Question 939: Answer and Explanation

Question: 939

____ Commercial paper

  • A. Freely traded in the secondary markets; yield and term are determined at the time of purchase.
  • B. Pay a fixed rate of interest every six months until maturity; issued in terms of ten years or more.
  • C. Can be redeemed at any time without penalty; objective is to earn interest for shareholders.
  • D. Unsecured promissory note issued by corporations with a fixed maturity of up to 270 days.

Correct Answer: D

Explanation:

Commercial paper is an unsecured promissory note issued by a corporation with a fixed maturity of up to 270 days.

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