Consider the following statements regarding negative yield bonds 1 These are debt instruments that o...........

General Awareness : Finance Indian Economy

Consider the following statements regarding negative yield bonds.

1. These are debt instruments that offer to pay the investor a maturity amount lower than the purchase price of the bond.

2. It can be issued by Government only.

3. Investors pay interest to the borrower to keep their money with them. Which of the statements given above is/are correct?

This questions was previously asked in

RBI Grade B (28 May 2022)

View All RBIB Previous Year Papers

1 and 2 only

1 and 3 only

1, 2 and 3

3 only

2 only

Explanation:

- Statement 1: Negative yield bonds do indeed offer to pay the investor a maturity amount that is lower than the purchase price, meaning investors can end up receiving less than they paid. This statement is correct.

- Statement 2: Negative yield bonds are not exclusively issued by governments; corporations can also issue them. This statement is incorrect.

- Statement 3: Investors effectively pay interest to the borrower, as they are willing to receive less at maturity, which implies they are paying for the privilege of holding the bond. This statement is correct.

- Option 1: Only Statement 1 is correct.

- Option 2: Statements 1 and 3 are correct.

- Option 3: All three statements are incorrect.

- Option 4: Only Statement 3 is correct.

- Option 5: Only Statement 2 is correct.

The correct answer is Option 2: 1 and 3 only.