Which of the following is likely to be the most cost effective method of borrowing the money?

A large, listed company in the food and household goods industry needs to raise $50 million for a period of up to 6 months.

It has an excellent credit rating and there is almost no risk of the company defaulting on the borrowings. The company already has a commercial paper programme in place and has a good relationship with its bank.

Which of the following is likely to be the most cost effective method of borrowing the money?
A . Bank overdraft
B . 6 month term loan
C . Treasury Bills
D . Commercial paper

View Answer

Answer: D