With reference to Impact Bonds, consider the following statements:1.Impact bonds can be used for all sorts of purposes and in any sector.2.Skill Impact Bond (SIB) is India’s first development impact bond for skilling and employment.3.Social Impact Bonds are entirely dependent upon the success of the social outcome.4.Social Impact Bonds are affected by variables such as interest rate risk, reinvestment risk, or market risk.How many of the above statements are correct?

Q. With reference to Impact Bonds, consider the following statements:
1.Impact bonds can be used for all sorts of purposes and in any sector.
2.Skill Impact Bond (SIB) is India’s first development impact bond for skilling and employment.
3.Social Impact Bonds are entirely dependent upon the success of the social outcome.
4.Social Impact Bonds are affected by variables such as interest rate risk, reinvestment risk, or market risk.
How many of the above statements are correct?

[A] Only one

[B] Only two

[C] Only three

[D] All four

Answer: C

Notes:

Explanation –

Statements 1, 2 and 3 are correct. Impact bonds can be used for all sorts of purposes and in any sector, from social projects that help to reduce inequality or improve care for the elderly to projects that enhance public transport or sustainable energy projects. Skill Impact Bond (SIB) is India’s first development impact bond for skilling and employment. Social Impact Bonds are entirely dependent upon the success of the social outcome.

Statement 4 is incorrect. Unlike normal bonds, social impact bonds are not affected by variables such as interest rate risk, reinvestment risk, or market risk.

Source: ForumIAS

Post-Mains Strategy Session by Mr. Ayush Sinha | ForumIAS