💥Join UPSC 2027,2028 Mentorship (June Batch) + XFactor Notes & Microthemes PDF

With reference to Convertible Bonds, consider the following statements

With reference to Convertible Bonds, consider the following statements :
1. As there is an option to exchange the bond for equity, Convertible Bonds pay a lower rate of interest.
2. The option to convert to equity affords the bondholder a degree of indexation to rising consumer prices.
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

Answer:

(c)

Factual

Core Books/NCERT

Explanation

Both the statements are correct upon reading of global websites on financial instruments.