WorksheetsUnderstanding Debt Instruments
Total questions: 20
Worksheet time: 10mins
What is a debt instrument?
A type of company share
A loan given by investors to government/companies
A digital payment method
A foreign exchange product
What do investors receive from debt instruments?
Dividends
Fixed interest and principal at maturity
Voting rights
Bonus shares
What is a coupon rate?
The bond’s maturity value
The bond’s annual fixed interest
The trading fee
The issue discount
What happens to bond prices when interest rates rise?
Bond prices rise
Bond prices stay the same
Bond prices fall
Bond prices double
What happens to bond prices when interest rates fall?
Prices fall
Prices rise
Prices become zero
Prices become volatile only
What does yield represent?
The printed value on the bond
Actual return based on current price
Dividends from the company
The purchase commission
What is maturity?
Date when interest stops
Date when bond is issued
Date when principal is repaid
Date when rating changes
Which one has lower risk?
Equity
Corporate bonds
Government Securities (G-Secs)
Cryptocurrency
Treasury Bills are issued for how long?
3–5 years
91, 182, or 364 days
10–20 years
25–30 years
Which instrument is issued by state governments?
G-Secs
T-Bills
State Development Loans (SDLs)
Masala Bonds
Municipal bonds are issued by whom?
Corporates
City corporations
RBI
SEBI
Masala Bonds are:
Dollar-denominated bonds
Crypto-backed bonds
Rupee-denominated bonds issued overseas
Bonds for food industry
Corporate bonds generally offer:
Lower returns and lower risk
Higher returns but higher credit risk
No interest
Zero default risk
Credit Spread means:
Difference between bond and stock prices
Difference between yields of corporate and govt bonds
Difference between two maturity dates
Difference between coupon and dividends
Which rating indicates the highest safety?
A
BBB
AAA
BB
Which regulator oversees corporate bonds?
RBI
IRDAI
SEBI
Ministry of Finance
Which regulator manages government securities and monetary policy?
SEBI
RBI
NSE
Finance Commission
Equity instruments provide:
Fixed returns
Ownership rights
Guaranteed maturity
Lower risk than debt
What is one major role of debt markets in the economy?
Setting gold prices
Helping government raise funds without printing money
Determining stock dividends
Increasing bank profits
Benchmark G-Sec yields influence:
LPG prices
Salaries of govt employees
Loan interest rates in the economy
Currency colours
