A finance company issues commercial paper to an insurance company, which pays for them with the...

A finance company issues commercial paper to an insurance company, which pays for them with the funds raised by issuing bonds to Mrs Jones. The finance company then buys shares issued by Telstra for the funding of its new tower.

Who provides funds to Telstra?

	A.	Mrs Jones
	B.	The finance company
	C.	Telstra
	D.	The insurance company

Expert Solution

The finance company issues commercial paper to the insurance company for which the insurance company pays. The payment by the insurance company comes through selling of bonds to Mrs. Jones. All these transactions give the finance company money to buy Telstra bonds which is used to fund its new tower. Since the money came initially through the payment made by Mrs. Jones, the project is funded by Mrs. Jones. The correct opinion is A.

Rahul Sunny answered 2 years ago

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