Which of the following is issued by registered foreign portfolio investors to overseas investors who want to be part of the Indian stock market without registering themselves directly?
[UPSC Civil Services Exam – 2019 Prelims]
(a) Certificate of Deposit
(b) Commercial Paper
(c) Promissory Note
(d) Participatory Note
Answer: (d)
Explanation:
- P-Notes or Participatory Notes are Overseas Derivative Instruments that have Indian stocks as their underlying assets.
- Certificate of Deposit (CDs) is short-term instruments issued by Commercial Banks and Special Financial Institutions (SFIs), which are freely transferable from one party to another.
- Commercial paper, or CP, is a short-term debt instrument issued by companies to raise funds generally for a time period up to one year.
- A promissory note is a financial instrument that contains a written promise by one party to pay another party a definite sum of money.
