AICPA Exam CPA-Business Topic 3 Question 43 Discussion

Choice 'c' is correct. Although commercial paper has a secondary market available, it is generally not an active secondary market. Commercial paper is usually sold to the money markets by highly creditworthy companies.

Choice 'a' is incorrect. The maturity dates are generally less than 270 days.

Choice 'b' is incorrect. Commercial paper can be sold to the money markets through a variety of intermediaries including brokers, dealers, investment brokers, etC. It can also be sold direct from one company to another.

Choice 'd' is incorrect. The interest rate on commercial paper is below the prime rate, but generally above the Treasury bill rate.