Consider the following statements about Participatory notes 1 These are the hedge funds which are no...........

Economic Affairs Foreign Investment

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Consider the following statements about Participatory notes:

1.These are the hedge funds which are not required to register with the Securities and Exchange Board of India (SEBI).

2.Any dividends or capital gains collected from the P-notes goes back to the investors.

3.P-notes help in decreasing the economic volatility of the exchanges in India.

Which of the statements given above is/are correct?

1 only

3 only

1 and 3 only

1, 2 and 3

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Explanation:

The correct statement about Participatory notes (P-notes) is:

These are the hedge funds which are not required to register with the Securities and Exchange Board of India (SEBI).

So, statement 1 is correct. However, statements 2 and 3 are not accurate:

Statement 2 is incorrect. Dividends or capital gains collected from P-notes do not necessarily go back to the investors directly; they depend on the arrangements made by the issuer of the P-notes.

Statement 3 is incorrect. P-notes can contribute to increased volatility in the Indian stock exchanges due to their speculative nature, rather than decreasing it.

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