Promissory notes are a type of debt instrument issued by a borrower to a lender. The statement that is NOT a feature of promissory notes is that only the largest and most creditworthy corporations issue P-notes.
The correct answer is d. Only the largest and most creditworthy corporations issue P-notes.
Promissory notes are a type of debt instrument issued by a borrower to a lender in which the borrower promises to repay the borrowed amount at a future date. Let's look at the statements and determine which one is NOT a feature of promissory notes:
- a. They are issued at discount to face value: This statement is true. Promissory notes can be issued at a discount to their face value, meaning the borrower receives less money upfront in exchange for a promise to repay the full amount in the future.
- b. A typical P-note facility issue program is a revolving facility: This statement is true. A revolving facility allows the borrower to borrow, repay, and re-borrow funds within a specified limit.
- c. A company may pay an additional fee to the underwriter for endorsing the issue as well: This statement is true. The underwriter helps facilitate the issuance of the promissory note and may charge a fee for their services.
- d. Only the largest and most creditworthy corporations issue P-notes: This statement is NOT a feature of promissory notes. Promissory notes can be issued by corporations of all sizes, not just the largest and most creditworthy ones.
Therefore, the correct answer is d. Only the largest and most creditworthy corporations issue P-notes.