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      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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