The correct answer is B. Fully paid Equity Shares and debentures in demat form.
A loan against shares or debentures is a type of loan that is secured by shares or debentures. The lender will typically require the borrower to provide a margin, which is a percentage of the loan amount that the borrower must deposit as collateral. The margin requirement is typically 20%, but it can be higher or lower depending on the lender’s risk assessment.
The borrower can use the loan for any purpose, but it is often used to finance a major purchase, such as a car or a house. The loan can also be used to consolidate debt or to invest in a business.
Loans against shares or debentures are typically secured by shares or debentures that are held in demat form. Demat shares are shares that are held electronically in a depository account. This means that the borrower does not have to physically hold the shares, which can make it easier to manage the loan.
Loans against shares or debentures can be a good option for borrowers who need to borrow money quickly and easily. However, it is important to understand the risks involved before taking out a loan. The borrower is at risk of losing the shares or debentures that are used as collateral if they default on the loan.
Here is a brief explanation of each option:
- Option A: Preference Share and Covertible debentures. This option is incorrect because convertible debentures are not shares. Convertible debentures are a type of debt instrument that can be converted into shares at a predetermined price.
- Option B: Fully paid Equity Shares and debentures in demat form. This option is correct because fully paid equity shares and debentures in demat form can be used as collateral for a loan.
- Option C: All shares and debentures in physical form. This option is incorrect because shares and debentures in physical form can be lost or stolen.
- Option D: Only Preference Share and partly paid debentures. This option is incorrect because partly paid debentures are not shares. Partly paid debentures are a type of debt instrument that the borrower must pay for in installments.