Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Issue and Redemption of Debentures

Question:

What motivates debenture holders to accept the offer of converting their debentures into shares or new debentures?

Options:

They find the offer beneficial to their financial interests

It is required by regulatory authorities

It guarantees a higher return on investment

It allows them to avoid taxes on debenture interest

Correct Answer:

They find the offer beneficial to their financial interests

Explanation:

Debenture holders are motivated to accept the offer of converting their debentures into shares or new debentures when they believe it is financially advantageous to them. Overall, the decision to accept the conversion offer is driven by the individual financial goals and assessment of the debenture holders. They evaluate the potential benefits and risks associated with the conversion and make a decision based on their financial interests and expectations.