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.

Practice Next
×
×