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AFP CTP Question # 195 Topic 20 Discussion

CTP Exam Topic 20 Question 195 Discussion:
Question #: 195
Topic #: 20

XYZ Company has a well established commercial paper (CP) program that they use to fund operations. The company is expanding by purchasing a new factory. The CFO is worried about the time and expense needed to issue long-term debt and decides to use the funds they raise in the CP market to pay for the purchase of the factory. This strategy will be successful if:


A.

an interest rate swap is used.


B.

a credit default swap is employed.


C.

a commodities future is purchased.


D.

the yield curve remains upward sloping.


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