Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Money market instruments
- This topic has 1 reply, 2 voices, and was last updated 4 years ago by John Moffat.
- AuthorPosts
- October 28, 2020 at 6:25 pm #593378
Hi Sir,
I have this question which I am not sure why Commercial Paper is the best answer.At a recent board meeting of HCF Co, a stock-market listed company based in the country of Treadwell, a non-executive director suggested that the election of a new government may have an impact on HCF Co’s business going forward. The finance director has been given responsibility for considering the impact of the new government on HCF Co and for reporting back at the next board meeting.
HCF are considering sources of short term and long term finance as they have identified borrowing needs for the next 9 months and separately for the next 5 years. Possible sources will be considered ahead of the next board meeting.
A second non-executive director raised the problem of agency theory with the other non-executive directors and was asking for guidance on what actions can be taken to reduce the risks.
If HCF Co wishes to borrow funds for the next 6 months which of the following money market instruments could they use?
Certificate of deposit
Treasury bill
Money market account
Commercial paperTo me they can all be for 6 months?
Thank you
LeoOctober 29, 2020 at 9:57 am #593413HFC is borrowing.
Certificates of deposit, treasury bills, and money market account are for depositing not for borrowing.
- AuthorPosts
- You must be logged in to reply to this topic.