There are two statements marked as Assertion (A) and Reason (R). Mark your answer as per the options given below.
Assertion (A): Debentures of the company are an instrument acknowledging a investment.
Reason (R): It is the denomination of the loan.
Answer & explanation
Correct answer: option 3
The correct answer is option 3- Assertion (A) is false but Reason(R) is true.
Assertion (A): Debentures of the company are an instrument acknowledging a investment. THIS IS FALSE as debentures is a debt.
Reason (R): It is the denomination of the loan. THIS IS TRUE.
Debenture is a written instrument acknowledging a debt under the common seal of the company. It contains a contract for repayment of principal after a specified period or at intervals or at the option of the company and for payment of interest at a fixed rate payable usually either half-yearly or yearly on fixed dates. A debenture is one of the most typical forms of long term loans that a company can take. It is normally a loan that should be repaid on a specific date. The majority of debentures come with a fixed interest rate.