Store Management May/June 2015

Question 2

Explain the following capital market instruments:

(a)       bonds;
(b)       shares;
(c)        convertibles;
(d)       debentures;
(e)       options.

Observation

Candidates’ performance was average. However, some candidates could not differentiate between ‘bond and debentures’ thereby lose some marks in this question.

Bonds – these are securities issued by the government or corporate bodies to raise money. They are issued as redeemable instrument with date of payment and the interest payable attached to it at the date of issue.

Debentures – this is a long-term debt instrument used by large organizations to borrow money at a fixed rate of interest. It could be secured or unsecured debentures.