Q. With reference to Perpetual Bonds, consider the following statements;
1.Like other types of bonds, these perpetual bonds are also redeemable.
2.This type of bond is often considered a type of equity, rather than debt.
Which of the statements given above is/are correct?
Answer: B
Notes:
Statement 1 is incorrect: One major drawback to these perpetual bonds is that they are not redeemable. However, the major benefit of them is that they pay a steady stream of interest payments forever.
Statement 2 is correct: A perpetual bond, also known as a “consol bond” is a fixed income security with no maturity date. This type of bond is often considered a type of equity, rather than debt.
Source: Livemint
