Which of the following is not correct related to the terms of debenture?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Debentures can be issued at discount and redeemed at discount.
Debentures may be issued at par, at a premium or at a discount, but they are redeemed only at par or at a premium. Redemption is repayment of the debt, and a company cannot repay its lenders less than the face value it owes them. The book lists six combinations, and none of them redeems at a discount.
Option (1) Debentures can be issued at discount and redeemed at premium. — A recognised term. It is one of the six situations; the discount and the premium are both a loss on issue.
Option (2) Debentures can be issued at premium and redeemed at premium. — A recognised term. It is the sixth situation in the book's list.
Option (3) Debentures can be issued at par and redeemed at premium. — A recognised term. The premium payable on redemption is a loss on issue recorded when the debentures are issued.
NCERT (2026-27 edition):
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