CFO Jorge Sierra needs short-term financing for a large corporation. He decides to issue an unsecured debt instrument of $200,000 to be paid back in 150 days. Jorge is using ________
A) a mortgage
B) factoring
C) commercial paper
D) retained earnings
E) trade credit
C
Explanation: C) Commercial paper is unsecured, short-term debt of $100,000 that matures in 270 days (9 months) or less. It does not need to be registered with the Securities and Exchange Commission. Because the debt is unsecured only companies with excellent credit reputations are able to sell commercial paper.
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