Answer (C) is correct . Trade credit is a spontaneous source of financing because it arises automatically as part of a purchase transaction. Because of its ease in use, trade credit is the largest source of short-term financing for many firms both large and small.
Answer (A) is incorrect because Installment loans are usually a longer-term source of financing and are more difficult to acquire than trade credit.
Answer (B) is incorrect because Commercial paper is normally used only by large companies with high credit ratings.
Answer (D) is incorrect because Bankers’ acceptances are drafts drawn on bank deposits; the acceptance is a guarantee of payment at maturity.
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