At which value a company may return a debenture if it issues a debenture of ₹100 at ₹105?
Answer & explanation
Correct answer: option 4
Depending upon the terms and conditions of issue and redemption of debentures, the following six situations are commonly found in practice.
(i) Issued at par and redeemable at par
(ii) Issued at discount and redeemable at par
(iii) Issued at a premium and redeemable at par
(iv) Issued at par and redeemable at a premium
(v) Issued at a discount and redeemable at a premium
(vi) Issued at a premium and redeemable at a premium - Premium on redemption can be more than premium on the issue.