Question4 Sun Child Co. is a childcare centre with locations all around the country. They need to raise additional funding to meet their employee salary obligations. Management decides to issue a commercial bill priced at $1 million this month. These instruments would be issued in the: I. Primary marketII. Retail marketIII. Money marketIV. Secondary marketV. Childcare marketVI. Capital marketVII. Private market III, VI and VII I, III and VI I, II and III I and III I, III, IV and VII ResetMaximum marks: 1 Flag question undefinedSingle choice
A
III, VI and VII
B
I, III and VI
C
I, II and III
D
I and III
E
I, III, IV and VII

Question

Question4 Sun Child Co. is a childcare centre with locations all around the country. They need to raise additional funding to meet their employee salary obligations. Management decides to issue a commercial bill priced at $1 million this month. These instruments would be issued in the: I. Primary marketII. Retail marketIII. Money marketIV. Secondary marketV. Childcare marketVI. Capital marketVII. Private market III, VI and VII I, III and VI I, II and III I and III I, III, IV and VII ResetMaximum marks: 1 Flag question undefinedSingle choice

A

III, VI and VII

B

I, III and VI

C

I, II and III

D

I and III

E

I, III, IV and VII

BlackTom AI · Accepted Answer

Commercial bills are short-term, negotiable debt instruments issued to raise immediate funds, so they are money market instruments sold when first issued in the primary market.

1) Relevant knowledge points and concepts
- Primary market: where new securities are created and sold for the first time (issuance).
- Money market: market for short-term debt instruments (typically maturities under one year), e.g., commercial bills, Treasury bills, commercial paper.
- Secondary market: where existing securities are traded after issuance.
- Capital market: market for long-term securities (equity and long-term debt).
- Retail market and childcare market: retail market refers to sales to individual investors (not a defining location for issuance of commercial bills); “childcare market” is irrelevant.

2) Step-by-step reasoning
Step 1: Identify the instrument — a commercial bill is a short-term debt instrument used for working capital and typically matures within months.  
Step 2: Determine the market type by maturity — because its maturity is short (money market category), it belongs to the money market.  
Step 3: Determine where it is issued — the firm is issuing the bill now, so the transaction happens in the primary market (first sale of a new security).  
Step 4: Combine these conclusions — the correct classifications are Primary market (I) and Money market (III).

3) Intermediate/logic steps shown
- Commercial bill maturity < 1 year ⇒ qualifies as money market instrument (III).  
- New issuance (priced at $1 million this month) ⇒ sold in primary market (I).  
- Therefore: I and III.

4) Why the correct answer is correct
Because the instrument is both newly issued (primary market) and short-term (money market), the only accurate labels among the choices are I and III.

5) Why other options are incorrect (brief)
- III, VI and VII: includes capital market (VI) which is for long-term instruments — incorrect.  
- I, III and VI: wrongly includes capital market (VI).  
- I, II and III: includes retail market (II) — not a defining characteristic of commercial bill issuance.  
- I, III, IV and VII: adds secondary market (IV) and private market (VII) incorrectly for initial issuance and misclassifies as capital market-related.