21.Commercial paper is typically issued by:  A. Government  B. Corporations  C. Banks  D. Stock exchanges

Understanding Commercial Paper

Commercial paper is a short-term, unsecured debt instrument issued by corporations to finance their immediate cash flow needs, such as inventory purchases or payroll. It is a way for companies to raise funds quickly without the lengthy process required for traditional loans. Since commercial paper is typically issued for terms that range from a few days up to 270 days, it is popular among corporations looking to manage short-term financial needs.

Analysis of Options

1. A. Government: While governments can issue debt instruments like treasury bills, commercial paper is not a tool commonly utilized by government entities.

2. B. Corporations: This is the primary issuer of commercial paper. Large corporations with high credit ratings often issue commercial paper to obtain funds more efficiently than traditional bank loans.

3. C. Banks: Banks typically issue their own short-term debt instruments and utilize other funding sources that are not classified as commercial paper.

4. D. Stock exchanges: Stock exchanges are platforms for buying and selling securities and do not issue commercial paper.

Final Answer

B. Corporations is the correct answer, as commercial paper is predominantly issued by corporations to meet their short-term financing needs.