AICPA CPA-Business Exam - Topic 3 Question 33 Discussion

Actual exam question for AICPA's CPA-Business exam

Question #: 33
Topic #: 3

Which one of the following responses is not an advantage to a corporation that uses the commercial paper market for short-term financing?

AThe borrower avoids the expense of maintaining a compensating balance with a commercial bank.

BThere are no restrictions as to the type of corporation that can enter into this market.

CThis market provides a broad distribution for borrowing.

DA benefit accrues to the borrower because its name becomes more widely known.

Show Suggested Answer

Suggested Answer: B

Choice 'b' is correct. There are restrictions as to the type of corporation that can enter into the commercial paper market for short-term financing, since the use of the open market is restricted to a comparatively small number of the most credit-worthy large corporations.

The commercial paper market:

A Avoids the expense of maintaining a compensating balance with a commercial bank.

C Provides a broad distribution for borrowing.

D Accrues a benefit to the borrower because its name becomes more widely known.

by Merissa at May 05, 2022, 07:45 AM

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Ayesha

5 months ago

I think A is the best reason to use commercial paper.

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Kris

6 months ago

Wait, D? Really? Is that a real benefit?

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Sean

6 months ago

C is true, broad distribution is key for borrowing.

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Dorothy

6 months ago

I disagree, B seems like a huge plus too!

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Felix

6 months ago

A is definitely an advantage! No compensating balance needed.

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Mari

6 months ago

This question seems straightforward, but I want to make sure I understand the key differences between the systems described. I'll need to carefully read through the details to determine the best answer.

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Tashia

6 months ago

Hmm, I'm not too familiar with the ServiceNow HR application naming conventions. I'll have to think this one through carefully.

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Rhea

6 months ago

I'm a little confused by the wording of the question. Is it asking about the primary consideration or the most important factor? I'll need to re-read it a few times to make sure I understand what they're looking for.

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Delisa

6 months ago

This seems like a straightforward question about using agent performance metrics to identify and address issues. I'd focus on reviewing the interactions with significant variations from the average, as that could point to training or coaching needs.

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