Target Exam

CUET

Subject

Accountancy

Chapter

Issue and Redemption of Debentures

Question:

How debentures can be redeemed by a company?

Options:

Conversion into shares

Lump sum payment at the end

Payment in Installments

All of these

Correct Answer:

All of these

Explanation:

Redemption of debentures refers to extinguishing or discharging the liability on account of debentures in accordance with the terms of issue. In other words redemption of debentures means repayment of the amount of debentures by the company. There are four ways by which the debentures can be redeemed. These are :
1. Payment in lump sum
2. Payment in instalments
3. Purchase in the open market
4. By conversion into shares or new debentures.