Target Exam

CUET

Subject

-- Accountancy Part A

Chapter

Issue and Redemption of Debentures

Question:

What is the return on the Debenture?

Options:

Profit

Dividend

Interest

None of these

Correct Answer:

Interest

Explanation:

The correct answer is option 3- Interest.

The return on shares is known as dividend while the return on debentures is called interest.

Debenture holders are creditors of the company, and they are entitled to receive a fixed rate of interest, regardless of whether the company makes a profit or not.