Final answer:
The maximum maturity for commercial paper is typically 270 days. It is a short-term financing tool used by corporations with good credit ratings to fund immediate liabilities. so, option C is the correct answer.
Step-by-step explanation:
The maximum maturity for commercial paper is usually 270 days. Commercial paper is a short-term, unsecured promissory note issued by corporations with high credit rankings to finance their short-term liabilities such as payroll, accounts payable, and inventories. It is a popular option for corporations to manage their working capital requirements due to its flexibility and typically lower interest rates compared to other forms of short-term borrowing.
Because it's unsecured, investors rely heavily on the issuer's credit rating, and it is typically sold on a discount basis from its face value. Issuers prefer commercial paper because it does not require collateral and is an efficient way to access cash quickly, while investors enjoy it because it offers competitive returns compared to other short-term investments.