Which financial instrument matures at face value but is sold at a discount?

The correct financial instrument that matures at face value but is sold at a discount is commercial paper. Commercial paper is an unsecured, short-term debt instrument issued by corporations to finance their immediate monetary needs, such as inventory purchases or operating expenses. It is typically issued at a discount to its face value, meaning that the investor pays less than the nominal value of the paper. Upon maturity, the issuer pays the investor the full face value of the commercial paper, creating a profit for the investor based on the difference between the purchase price and the face value.

This characteristic aligns well with the concept of discount instruments, differentiating it from other financial instruments. Bankers' acceptances are typically short-term loans guaranteed by a bank and do not typically mature at a discount. Perpetual preferred shares do not have a maturity date and therefore do not fit this criteria. Money market funds, on the other hand, are collective investment schemes that invest in short-term debt securities and do not primarily deal with instruments sold at a discount maturing at face value.

Understanding this distinction is crucial, as it highlights the nature of various financial instruments available in the market, especially in the context of short-term financing options.