Q. Consider the following:

1. Certificate of Deposit (CD)
2. Commercial Paper (CP)
3. Corporate Bonds

Which of the above is/are short-term debt instruments?
Answer: Only 1 and 2
Notes: 1. Certificate of Deposit (CD): A time deposit offered by banks with fixed maturity, typically ranging from a few weeks to several years. They are insured by the FDIC up to a certain limit, making them low-risk investments. 2. Commercial Paper (CP): An unsecured, short-term debt instrument issued by corporations to finance immediate expenses, typically maturing in 1 to 270 days. CP is often issued at a discount and does not require collateral. 3. Corporate Bonds: Long-term debt securities issued by corporations to raise funds, usually maturing in more than one year. They pay periodic interest and are considered higher risk than CDs and CPs due to the credit risk associated with the issuing corporation.