Final answer:
A financial instrument that must be repaid within a year and can be sold anytime is known as commercial paper; it is used for immediate funding needs and is a component of the money markets.
Step-by-step explanation:
The financial instrument that must be paid in less than one year from the date of the financial statement on which it is reported, and can be sold to other investors at any time, is known as commercial paper. Commercial paper is an unsecured, short-term debt instrument issued by a corporation, typically used for the financing of payroll, accounts payable, and inventories, and meeting other short-term liabilities. These are usually issued at a discount and reflect prevailing market interest rates.
Money markets deal with various financial instruments that facilitate the lending of money for a short period which is usually less than one year. Money markets contribute to the economic stability and development of a country by providing short-term liquid funding for the government, financial institutions, and corporations.
Commercial papers are considered to be a part of the money market instruments that provide companies with quick funds that need to cover immediate expenditures. Unlike long-term loans, these instruments do not require collateral and are relied upon due to their high liquidity and typically lower interest rates compared to long-term debt.