Question : Which of the following is a fixed-income security?
Option 1: Equity shares
Option 2: Debentures
Option 3: GDRs
Option 4: Preference shares
Correct Answer:
Debentures
Solution : The correct answer is (b) Debentures
Debentures are a fixed-income security. Fixed-income securities are financial instruments that provide a fixed or predetermined stream of income to the investor over a specific period of time. Debentures, as long-term debt instruments, typically pay a fixed rate of interest to debenture holders at regular intervals until the maturity date. The interest payments on debentures are predetermined and do not fluctuate based on the company's performance. Debenture holders receive a fixed interest income, and the principal amount is repaid at maturity or redemption.
