Question

What competitive advantage do issuers have when offering NCDs to LIC?

a.

Lower interest rates

b.

Tax incentives

c.

Higher interest rates than banks

d.

Guaranteed returns

Answer: (c).Higher interest rates than banks Explanation:A 10.8% to 11% per annum interest rate is considered a very competitive rate, enabling issuers to get their NCDs subscribed by LIC for high interest. This is highlighted in comparison to banks, which are borrowing at the rate of 9.5% and making investments at a rate of 11% or more.

Interact with the Community - Share Your Thoughts

Uncertain About the Answer? Seek Clarification Here.

Understand the Explanation? Include it Here.

Q. What competitive advantage do issuers have when offering NCDs to LIC?

Similar Questions

Explore Relevant Multiple Choice Questions (MCQs)

Q. What is the maximum allowable exposure to venture funds and AIFs combined for a life insurance company?

Q. What is the minimum percentage of Category II AIFs that should be invested in infrastructure entities, SME entities, venture capital undertakings, or social venture entities?

Q. Why is investment income important for insurance companies?

Q. What are the two broad categories of investment avenues?

Q. How is the Rate of Return on an investment determined?

Q. How is Risk on Investment defined?

Q. Why is marketability/liquidity considered an important factor for investment decisions?

Q. What are the three types of Tax Benefits associated with investments?

Q. What are Government Securities also known as?

Q. What is the recommended reporting structure for the Investment Department in an insurance company?

Q. How is data transfer between Front Office and Back Office recommended to be carried out?

Q. What is emphasized regarding the integration of multiple Data-Entry Systems in investment functions?

Q. What role does the Chief Financial Officer (CFO) play in the reporting structure of the investment department?

Q. What is the purpose of the Authority Matrix?

Q. What is the purpose of the Maker/Checker procedure?

Q. What is the role of the Cash Management System (CMS) in managing liquidity risks?

Q. What is the purpose of the System in monitoring and controlling Inter Fund Transfer transactions?

Q. What types of risks are associated with investments?

Q. What is the significance of the System capturing and considering Instrument Ratings?

Q. Why is the periodic credit review necessary for investee companies?

Recommended Subjects

Are you eager to expand your knowledge beyond IC 89 Management Accounting? We've handpicked a range of related categories that you might find intriguing.

Click on the categories below to discover a wealth of MCQs and enrich your understanding of various subjects. Happy exploring!