CHARACTERISTICS OF OTHER SECURITIES

The key concepts in this section include:

Warrants: Give investors the right to buy shares of a company at a pre-determined price. Warrants are usually traded on the stock exchange and have a longer lifetime compared to options contracts.
Convertible Debentures: Debt instruments that can be converted into equity shares at a future date. They offer a lower coupon rate compared to pure debt instruments and provide the issuer with the advantage of not having to repay the debt on maturity.
Depository Receipts (DRs): Financial instruments that represent shares of a local company but are listed and traded on a stock exchange outside the country. DRs allow overseas investors to easily invest in a company and provide the company with a wider investor base.
Foreign Currency Convertible Bonds (FCCBs): Issued by Indian companies and subscribed to by investors in foreign currency. They carry a fixed interest or coupon rate and are convertible into a certain number of ordinary shares at a preferred price.
Exchange Traded Funds (ETFs) and Index Funds: Passive funds that generate returns in line with the index or benchmark. ETFs are listed and traded on a stock exchange, while Index Funds are not.
Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs): Trusts that invest in commercial real estate assets or infrastructure sector. They raise funds through an initial offer and subsequent follow-on offers, rights issue, and institutional placements.
Alternate Investment Funds (AIFs): Privately pooled investment vehicles that collect funds from investors for investing in accordance with a defined investment policy. AIFs are categorized into three categories: Category I, Category II, and Category III.
Corporate Fixed Deposits: Deposits placed by investors with companies for a fixed term carrying a prescribed rate of interest. They are governed by the Companies Act, 2013, and are considered a risky investment option as they are unsecured.