New Enroll in RBI Grade B New Batch - Starts on May 21

    Question

    Which of the following is incorrect about FFCB (Foreign

    Currency Convertible Bond)? i. Issued by an Indian listed company in overseas market. ii.It’s a debt instrument iii. FCCBs appear on the liabilities side of the issuing company's balance sheet.
    A 1) Only i Correct Answer Incorrect Answer
    B 2) Only i & ii Correct Answer Incorrect Answer
    C 3) Only i & iii Correct Answer Incorrect Answer
    D 4) Only ii Correct Answer Incorrect Answer
    E 5) None of these Correct Answer Incorrect Answer

    Solution

    FCCB is a Quasi-debt instrument because there is an option of converting the bonds into equity at a price determined at the time the bond is issued. As debt-instrument it ensures minimum guaranteed returns for the investor. Normally FCCBs have a maturity period of about five years during which no call or put option can be exercised.

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