With reference to Additional tier-1 (AT-1) bonds, consider the following statements:1.These bonds do not they do not carry any maturity date.2.Investors can return these bonds to the issuing bank and get the money.3.Banks issuing these bonds can skip interest payouts for a particular year or reduce the bonds face value provided their capital ratios fall below certain threshold levels.Which of the statements given above are correct?

Q. With reference to Additional tier-1 (AT-1) bonds, consider the following statements:
1.These bonds do not they do not carry any maturity date.
2.Investors can return these bonds to the issuing bank and get the money.
3.Banks issuing these bonds can skip interest payouts for a particular year or reduce the bonds face value provided their capital ratios fall below certain threshold levels..
Which of the statements given above are correct?

[A] 1 and 2 only

[B] 2 and 3 only

[C] 1 and 3 only

[D] 1, 2 and 3

Answer: C

Notes:

Explanation –

Statement 1 and 3 are correct. AT-1 bonds do not they do not carry any maturity date. Banks issuing these bonds can skip interest payouts for a particular year or reduce the bonds face value provided their capital ratios fall below certain threshold levels.

Statement 2 is incorrect. Investors cannot return these bonds to the issuing bank and get the money.

Source: ForumIAS

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