"Debt instruments can be classified based on certain features as below: · Based on coupon: – Fixed coupon or rate: investor gets a fixed rate of interest over the time period. Frequency of interest payment can be annual, semi-annual, quarterly or monthly. – Floating coupon or rate investor gets a rate of interest based on a benchmark. With the rise in the benchmark rate, the coupon is revised upwards and vice-versa. – Zero coupon: no interest is paid on the instrument in its life. Rather a lump sum amount is paid at the end of the tenure of the instrument. Zero coupon bonds are also known as deep discount bonds. · Based on conversion option (usually into equity shares of issuing company) – Non-convertible: at the time of maturity, the bond holders get back the amount in cash. – Convertible: at the time of maturity, the bond holders get other instruments (usually equity shares) instead of cash. It can be partly or fully convertible debt. In case of partly convertible debt, the debt holders get equity shares as well as cash in a pre-defined ratio. Source: http://in.docsity.com/en-docs/Organization_and_Function_of_Equity_-_Security_Analysis_and_Portfolio_Management_-_Solved_Quiz_"
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