Which of the following is issued by registered foreign portfolio investors to overseas investors who want to be part of Indian stock market without registe

1. A. Certificate of Deposits
2. B. Commercial Paper
3. C. Promissory Note
4. D. Participatory Note

Answer: D

Explanation

A Participatory Note (PN or P-Note) is a derivative instrument issued in foreign jurisdictions, by a SEBI registered Foreign Institutional Investor (FII) or its sub-accounts or one of its associates, against underlying Indian securities. The underlying Indian security instrument may be equity, debt, derivatives or may even be an index. Hence option (d) is the correct answer. A promissory note is a financial instrument that contains a written promise by one party to pay another party a definite sum of money, either on demand or at a specified future date. Commercial Paper (CP) is an unsecured money market instrument issued in the form of a promissory note. CPs are short-term instruments and the maturity period varies from seven days to up to one year. It was introduced to enable highly rated corporate borrowers to diversify their sources of short-term borrowings, and also to provide an additional instrument to investors. Certificate of Deposits-It is a saving certificate with a fixed maturity date at fixed interest rate. It is issued by commercial banks and financial institutions. It is issued in the form of promissory note in exchange of funds deposited in banks for specified period.