Question

Foreign Currency Convertible Bonds more commonly known as _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ .

• A. Euro Issues
• B. American Depositary Receipt
• C. Global Depository Receipts
• D. American Depositary Shares

Hint:

FCCBs = Foreign Currency + Convertible Bonds = Euro Issues. ADRs/GDRs represent equity, not bonds. Remember: "Euro" in finance often means "international/foreign currency" not necessarily European.

Answer 1

The Correct Option is A

Step 1: Understand what Foreign Currency Convertible Bonds (FCCBs) are.
FCCBs are bonds issued in a currency different from the issuer's domestic currency. They are convertible into equity shares of the issuing company after a specified period.

Step 2: Define each type of instrument.
Foreign Currency Convertible Bonds (FCCBs): Bonds issued in foreign currency that can be converted into equity shares.

Euro Issues: A general term for securities (bonds or equity) issued in a currency different from the currency of the country where they are issued. FCCBs are a type of Euro Issue.

American Depositary Receipt (ADR): Negotiable certificates issued by a US bank representing shares of a foreign company and traded on US exchanges.

Global Depository Receipts (GDRs): Similar to ADRs but can be traded in multiple countries globally.

American Depositary Shares (ADS): The actual shares underlying ADRs.

Step 3: Analysis of each option.
(A) Euro Issues: Correct. FCCBs are commonly referred to as Euro Issues because they are bonds issued in a foreign currency and convertible into equity.

(B) American Depositary Receipt: Incorrect. ADRs represent equity shares, not convertible bonds.

(C) Global Depository Receipts: Incorrect. GDRs also represent equity shares, not convertible bonds.

(D) American Depositary Shares: Incorrect. ADS are the underlying shares for ADRs, not related to convertible bonds.

Step 4: Conclusion.
Foreign Currency Convertible Bonds (FCCBs) are a type of Euro Issue—debt instruments issued in a foreign currency that can be converted into equity shares of the issuing company.

Final Answer: (A) Euro Issues