Q3 Write short notes on: a) Irredeemable bonds
Q3 Write short notes on:
- a) Irredeemable bonds
Answer: Irredeemable bonds or perpetual bonds
Bonds which will never mature are known as irredeemable or perpetual bonds. Indian Companies Act restricts the issue of such bonds and therefore, these are very rarely issued by corporates these days. In case of these bonds, the terminal value or maturity value does not exist because they are not redeemable. The face
- b) Zero coupon bonds
Zero coupon bonds
In India, zero coupon bonds are alternatively known as Deep Discount Bonds (DDBs). These bonds became very popular in India for over a decade because of issuance of such bonds at regular intervals by IDBI and ICICI. Zero coupon bonds have no coupon rate, that is, there is no interest to be paid out. Instead, these bonds are issued at a
