Gotwing Inc., a multinational company, issues promissory notes to big corporations. As the company has strong credit ratings, it easily finds buyers without having to offer a substantial discount for its debt. Which of the following short-term financing options is being used by Gotwing Inc. in the given scenario?

A) Trade credit

B) Line of credit

C) Commercial paper

D) Factoring

Commercial paper

Explanation:

Commercial paper is short term debt issued by a business entity. It a type of unsecured promissory notes in which interest rate paid is fixed. Maturity period of such debt is generally about from some weeks to months. Such debts are issued at discount rate which is based on current interest rate in the market.

These debts are generally issued to finance short term liabilities such as accounts payable and payroll.

Since in the problem statement, company is able to find buyer without much discount for its debt, and is in form of promissory note. The type of credit used is Commercial paper as per definition of commercial paper