As a corporate treasurer in NT Bhd, you are responsible to manage the company cash flow and liquidity. Hence, you are expected to be able to identify how soon funds will be needed by the company. Currently, the company is considering to issue commercial paper for its short term financing. The quoted rate on the RM denominated euro commercial paper has just blipped down recently. Your company can issue RM5 million of 60 days euro commercial paper in the French markets at 3.25%. Besides that, your company can invest the proceeds in Malaysia with a comparable maturity negotiable RM denominated certificates of deposit which are quoting 3.55%.

1. Explain FOUR (4) types of financial instruments that NT Bhd can issue for its short-term financing? (13 marks)

2. Ignoring any transaction costs, how much can NT Bhd earn by borrowing in the euro markets and investing in Malaysia. Is this a good deal? Should you expect it to last? Explain. (12 marks)

3. Also, NT Bhd is considering issue the corporate bond. Discuss the characteristics of corporate bonds. (13 marks)

4. To consider the issuing for a corporate bond, you need to describe the SIX (6) criteria that the management team of NT Bhd needs to concentrate on improving a bonds rating. (12 marks)