Homework Answers
Commercial paper are short-term money market instruments issued by corporations.
Commercial paper are usually issued as zero-coupon bonds. That is, they do not pay periodic interest, but they are issued at a discount to par value. The difference between the issue price and the par value is the discount amount, which represents the interest .
The answer is (a) - I only.
IV is incorrect - Commercial paper does not pay periodic interest.
II and III are incorrect. - these are earned by dealers of commercial paper, and not investors.
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