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With reference to the Non-Convertible Debenture, consider the following statements:
  1. It is a long-term financial instrument which acknowledges a debt obligation towards the issuer.
  2. It gives a higher rate of return compared to convertible debentures.
Which of the statements given above is/are correct?
  • a)
    1 Only
  • b)
    2 Only
  • c)
    Both 1 and 2
  • d)
    Neither 1 nor 2
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
With reference to the Non-Convertible Debenture, consider the followin...
Recently, the Securities and Exchange Board of India (Sebi) has proposed a review of corporate governance norms for a high-value debt-listed entity.
  • An entity which has listed its non-convertible debt securities on a recognised stock exchange and has an outstanding principal value of listed non-convertible debt securities of Rs. 500 Crore and above will be categorized as a ‘High-value debt listed entity’
  • 'Non-Convertible Debentures (securities) are long-term financial instruments which acknowledge a debt obligation towards the issuer.
  • The debentures which can't be converted into shares or equities are called non-convertible debentures (or NCDs).
  • To compensate for this drawback of non-convertibility, lenders are usually given a higher rate of return compared to convertible debentures.
  • In India, usually, these have to be issued with a minimum maturity of 90 days.
Hence both statements are correct.
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With reference to the Non-Convertible Debenture, consider the following statements: It is a long-term financial instrument which acknowledges a debt obligation towards the issuer. It gives a higher rate of return compared to convertible debentures.Which of the statements given above is/are correct?a)1 Onlyb)2 Onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer?
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