From the following select the method(s) of Redemption of Debentures.
(A) Lumpsum payment made at the end of specified period of time.
(B) Instalment payments made by drawing of lots.
(C) Purchase from open market
(D) Selling fixed Assets in open market
(E) Conversion into Shares and Debentures
Choose the correct answer from the options given below.
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → (A), (B), (C) and (E) only
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-
1. Payment in lump sum
2. Payment in installments
3. Purchase in the open market
4. By conversion into shares or new debentures.
*Selling fixed Assets in open market is a financial transaction not any method of redemption.