BMF – Nov 2019 – L1 – SA – Q20 – Basics of Business Finance and Financial Markets

Identifying a short-term funding source that is not used for long-term financing of public limited companies

Question

Public limited liability companies (Plc) obtain funds from a variety of sources. Which of the following is NOT a source of long-term funds for a public limited liability company?
A. Public offer
B. Commercial paper
C. Rights issue
D. Offer for Sale
E. Retained earnings

Answer

Answer: B (Commercial paper)

Explanation:
Commercial paper is a short-term financing instrument typically used to meet working capital needs, not long-term funding. Other options like public offer, rights issue, offer for sale, and retained earnings are common sources of long-term funds for public limited liability companies.

Tags: Financing, Long-Term Funding, Public Companies
Level: Level 1

Topic: Basics of Business Finance and Financial Markets
Series: NOV 2019

Uploader: Dotse