[Solved] Which of the following statements about the difference between bonds and debentures in the Indian corporate debt market is CORRECT? | Financial Awareness

Financial Awareness - Risk, Stability & Emerging Finance

Which of the following statements about the difference between bonds and debentures in the Indian corporate debt market is CORRECT?

ABoth bonds and debentures are debt instruments but bonds are generally secured while debentures may be secured or unsecured

BDebentures are issued only by government entities; bonds only by companies

CBonds are always secured by assets; debentures are always unsecured

DBonds represent ownership; debentures represent debt

Step-by-Step Solution

Step 1: Understand bonds and debentures
Both bonds and debentures are debt instruments issued by companies to raise funds.
Step 2: Analyze security aspect
Bonds are generally secured by assets; debentures can be secured or unsecured depending on terms.
Step 3: Evaluate incorrect options
Bonds and debentures are not ownership instruments; government issues securities but debentures are corporate instruments; bonds are not always secured.
Final Answer:
Both bonds and debentures are debt instruments but bonds are generally secured while debentures may be secured or unsecured → Option A
Quick Check:
Bonds vs debentures = bonds generally secured, debentures may vary ✅

Quick Trick: Bonds usually secured; debentures can be unsecured

Common Mistakes:

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