Interview Questions.

Top 100+ Bond Interview Questions And Answers

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Top 100+ Bond Interview Questions And Answers

Question 1. Who Can Offer These Long Term Infrastructure Bonds?

Answer :

The entities like LIC, IDFC, IFCI and different NBFCs which are labeled as Infrastructure Finance Companies via RBI will be allowed to issue these long term infrastructure bonds.

Question 2. What Is Non Convertible Debentures (ncd)?

Answer :

Nonconvertible debentures are unsecured bonds that can't be converted to corporation fairness or inventory. Nonconvertible debentures generally have higher interest fees than convertible debentures. A constant deposit is an association with a bank in which a depositor locations money within the financial institution and is paid a ordinary fixed earnings.

Debentures are lengthy-time period economic units which renowned a debt responsibility in the direction of the issuer. Some debentures have a function of convertibility into shares.

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Question 3. What Is A Junk Bond?

Answer :

A junk bond, additionally referred to as a "excessive-yield bond" or "speculative bond," is a bond rated "BB" or decrease due to its high default risk. Junk bonds normally provide interest fees 3 to four percent points higher than safer authorities problems.

Question four. What Is A Callable Bond?

Answer :

Callable bonds, additionally called "redeemable bonds," may be redeemed by means of the issuer prior to adulthood. Usually a top class is paid to the bond owner while the bond is called.

The main motive of a call is a decline in interest costs. If interest quotes have declined on the grounds that a organization first issued the bonds, it'll in all likelihood want to refinance this debt at a decrease charge. In this situation, the agency will name its present day bonds and reissue new, decrease-hobby bonds to save cash.

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Question five. Is Pan Also Mandatory While Investing In Ncd?

Answer :

Yes, quoting PAN quantity inside the NCD utility shape is obligatory regardless of the quantity concerned as per SEBI hints.

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Question 6. Can I Apply In Joint Names?

Answer :

Yes utility may be made in joint names with a most of three applicants, however the demat account shall additionally be held within the joint names and order of applicant shall be similar to performing in the demat account. In case of utility made in joint names, the tax advantage shall best be availed through the primary applicant.

Question 7. Who Would Get The Interest In Case Of The Joint Application Of Bonds?

Answer :

In case of joint software the interest will be paid to the account of the first applicant simplest.

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Question 8. Do We Require A Demat Account For Investing In Ncds?

Answer :

Yes, due to the fact all of the latest problems of NCDs have been compulsorily in the dematerialized shape.

Question 9. What Is A Convertible Bond?

Answer :

A convertible bond may be redeemed for a predetermined quantity of the company's fairness at sure times for the duration of its existence, commonly at the discretion of the bondholder. Convertibles are every so often called "CVs."

Issuing convertible bonds is one way for a organisation to minimize poor investor interpretation of its company actions. For instance, if an already public enterprise chooses to difficulty inventory, the market commonly interprets this as a sign that the business enterprise's percentage charge.

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Question 10. Can I Get Loan On These Bonds?

Answer :

You can not avail of any mortgage pledging these bonds inside the first five years. Thereafter, those bonds can be pledged to avail of loans.

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Question eleven. What Are Different Type Of Bonds Based On Their Issuers?

Answer :

Different kind of Bonds primarily based on their issuers are:-

Corporate Bonds .
Convertible Bonds.
Callable Bonds.
Term Bonds.
Amortized Bonds.
Adjustment Bonds.
Junk Bonds.
Angel Bonds.
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Question 12. What Is The Tenure & Lock-in Period Of These Tax Free Infrastructure Bonds?

Answer :

The Tenure of these bonds will be 10 years and the bonds have a lock-in of 5 years.

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Question 13. What Is A Adjustment Bond?

Answer :

Issued with the aid of a business enterprise all through a restructuring section, an adjustment bond is given to the bondholders of an incredible bond problem previous to the restructuring. The debt duty is consolidated and transferred from the notable bond issue to the adjustment bond. This method is correctly a recapitalization of the enterprise's first-rate debt duties, that is done by adjusting the terms (including hobby charges and lengths to adulthood) to growth the probability that the corporation.

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Question 14. What's The Difference Between Ncds & Fds?

Answer :

Following are the differences among an NCD and an FD:

Liquidity: In assessment to a NCD, FD can't be sold inside the market. As NCDs are indexed on a stock trade, you can sell them any time you need. However, financial institution FDs also are quite liquid and can be encashed earlier than maturity with minor penal costs.
Safety: While NCDs are secured debt, corporate FDs are altogether unsecured and financial institution FDs are secured to the quantity of Rs one lakh best.
Taxation.
Question 15. Can A Minor Apply For Subscription To These Bonds?

Answer :

A minor isn't eligible to use for subscription to those bonds.

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Question 16. Will Tds Be Deducted On These Bonds?

Answer :

No TDS will be deducted at the interest received as these bonds are issued Compulsorily in demat mode and shall be listed on NSE & BSE.

Question 17. How Will I Get My Interest On The Due Date?

Answer :

The hobby will be credited to the respective Bank account registered with the demat account via ECS on the due date for hobby payment, and -if the due date is a public holiday then the subsequent working date. 

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Question 18. What Is The Benefit Of Investing In Tax Saving Infrastructure Bonds If They Offer The Same Tax Benefit?

Answer :

The tax exemption advantage under Sec 80CCF on a sum of Rs. 20,000/- is over and above Rs. 1,00,000/- advantage below section 80C, 80CCC and 80CCD. 

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Question 19. Can Nris Invest In Ncds?

Answer :

Yes, NRIs can spend money on NCDs furnished the employer issuing NCDs lets in them to invest in it. 

Question 20. Can I Redeem My Fd Before The Original Term?

Answer :

Yes, FD can be closed earlier than the unique term of the FD. In the occasion of the Fixed Deposit being closed before finishing the original term of the deposit, interest will be paid at the rate applicable on the date of deposit, for the period for which the deposit has remained with the Bank. In case of premature withdrawal the deposit may be problem to penal fee of interest as prescribed with the aid of the Bank on the date of deposit. 

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Question 21. What Is A Amortized Bond?

Answer :

An amortized bond is a monetary certificate that has been decreased in cost for statistics on accounting statements. An amortized bond is handled as an asset, with the cut price quantity being amortized to interest expense over the lifestyles of the bond. If a bond is issued at a discount - this is, offered for sale under its par (face price) - the cut price ought to both be handled as an expense or amortized as an asset.

Amortization is an accounting technique that step by step and systematically.

Question 22. Who Are The Eligible Investors For Bonds?

Answer :

Only Resident Indian individuals (Major) and HUF can put money into those bonds.

Question 23. What Would Happen If I Apply Amount More Than Rs. 20,000/-?

Answer :

The allotment will be made for the sum implemented, however the benefit beneath segment 80CCF might also handiest be availed for a most sum of Rs. 20,000/-.

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Question 24. Are These Infrastructure Bonds Tax Free?

Answer :

No, the interest obtained in these bonds isn't always tax unfastened. The investor is susceptible to pay tax at the hobby received.

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Question 25. How To Purchase Ncds?

Answer :

Companies will commence the public issue of NCDs for a distinct time frame. After that the NCDs are indexed at the inventory exchange. Investors who are interested in making an investment inside the NCDs can buy the NCDs from the open market through registered agents.

Question 26. I Don't Have A Pan Card. Can I Still Apply For Subscription?

Answer :

PAN card is mandatory for subscribing to those bonds.

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Question 27. What Is An Angel Bond?

Answer :

Angel bonds are investment-grade bonds that pay a lower interest price due to the issuing employer's high credit score rating. Angel bonds are the alternative of fallen angels, which are bonds which have been given a "junk" score and are therefore a great deal greater unstable.

An funding-grade bond is rated at minimum "BBB" by using S&P and Fitch, and "Baa" through Moody's. If the company's ability to pay back the bond's primary is reduced, the bond rating might also fall underneath investment-grade.

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Question 28. What Is The Tax Treatment Of Interest On Infrastructure Bonds?

Answer :

The hobby acquired on those bonds shall be treated as earnings from another supply and shall shape a part of the whole profits of the assessee in that monetary year wherein they may be received.

Question 29. What Is A Bond?

Answer :

Bond is a debt instrument issued for a period of multiple year with the cause of elevating capital by way of borrowing. The Federal authorities, states, towns, corporations, and plenty of other sorts of institutions sell bonds. Generally, a bond is a promise to repay the fundamental along with interest (coupons) on a unique date (maturity). Some bonds do not pay interest, however all bonds require a repayment of primary. When an investor buys a bond, he/she turns into a creditor of the issuer.

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Question 30. What Is The Maximum Amount For Which The Benefit U/s 80ccf Be Availed?

Answer :

Maximum gain to an investor will be Rs. 20,000/- beneath section 80CCF of the Income Tax Act, 1961.

Question 31. What Is A Corporate Bond?

Answer :

A enterprise can difficulty bonds just as it can issue stock. Large groups have a whole lot of flexibility as to how lots debt they are able to issue: the restrict is regardless of the market will undergo. Generally, a short-term corporate bond has a adulthood of much less than five years, intermediate is 5 to 12 years and long time is extra than 12 years.

Corporate bonds are characterised by way of higher yields due to the fact there may be a higher chance of a business enterprise defaulting than a central authority.

Question 32. Is Investing In Ncds Better Than Parking Funds In Corporate And Bank Fds?

Answer :

NCDs vs. Corporate fixed deposits: Yes, of path NCDs are higher than organisation FDs. Though commonly the hobby fees on NCDs and employer FDs are greater or much less the identical, what tilts the stability in favour of NCDs is the chance-return component. Furthermore, there's additionally capability to earn capital appreciation from NCDs if there's a downward movement in the interest prices.

NCDs vs. Bank fixed deposits: Again, NCD is higher than a bank FD because the hobby differential is quite full-size .

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Question 33. What Are Income Tax Implications? How The Returns From Ncds Are Taxed?

Answer :

There can be two styles of earnings from NCDs:

First is the hobby profits from a NCD and tax treatment is exactly similar to any other interest earnings along with hobby profits from FDs. In different phrases, interest income from NCDs may be subjected to tax at everyday costs by using along with it in 'Income from different sources'.
Next is capital profits. If making a decision to promote the NCDs at the stock change, capital gains can also get up. If NCDs are offered with in a length of 12 months .
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Question 34. What Are Non-convertible Debentures (ncds)?

Answer :

Non-convertible debentures (NCDs) are debt gadgets with a hard and fast tenure issued through corporations to raise money for commercial enterprise functions. Unlike convertible debentures, NCDs can not be converted into equity shares of the issuing organisation at a destiny date.

Question 35. State Sampling Theorem?

Answer :

Municipal Bonds are Debt securities issued by means of country and local governments, and unique districts and counties.

Question 36. What Is A Term Bond?

Answer :

Term bonds are bonds from the same trouble that share the identical adulthood dates. Term bonds that have a call function may be redeemed at an in advance date than the opposite issued bonds. A name characteristic, or call provision, is an agreement that bond issuers make with buyers. This settlement is known as an "indenture," that is the agenda and the rate of redemptions, plus the maturity dates.
Some corporate and municipal bonds are examples of term bonds which have 10-yr call features.
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