Q22. Consider the following statements:
1. Non-convertible debentures are used as tools to raise long-term funds by companies through a public issue.
2. To compensate for this drawback of non-convertibility, lenders are usually given a higher rate of return compared to convertible debentures.
Which of the following statements are correct?
Q22. Consider the following statements:
1. Non-convertible debentures are used as tools to raise long-term funds by companies through a public issue.
2. To compensate for this drawback of non-convertibility, lenders are usually given a higher rate of return compared to convertible debentures.
Which of the following statements are correct?
The correct option is C c) Both 1 and 2
Non-convertible debentures are used as tools to raise long-term funds by companies through a public issue. To compensate for this drawback of non-convertibility, lenders are usually given a higher rate of return compared to convertible debentures.
Besides, NCDs offer various other benefits to the owner such as high liquidity through stock market listing, tax exemptions at source and safety since they can be issued by companies which have a good credit rating as specified in the norms laid down by RBI for the issue of NCDs. In India, usually, these have to be issued of a minimum maturity of 90 days
c) Both 1 and 2
Non-convertible debentures are used as tools to raise long-term funds by companies through a public issue. To compensate for this drawback of non-convertibility, lenders are usually given a higher rate of return compared to convertible debentures.
Besides, NCDs offer various other benefits to the owner such as high liquidity through stock market listing, tax exemptions at source and safety since they can be issued by companies which have a good credit rating as specified in the norms laid down by RBI for the issue of NCDs. In India, usually, these have to be issued of a minimum maturity of 90 days
