Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Issue and Redemption of Debentures

Question:

Which of the following is NOT one of the ways mentioned for redeeming debentures?

Options:

Payment in lump sum

Payment in installments

Purchase in the open market

Conversion into bonds

Correct Answer:

Conversion into bonds

Explanation:

The four ways of redemption of debentures are:
1) Payment in lump sum: This involves repaying the entire principal amount of the debentures in a single payment.
2) Payment in installments: Debentures are redeemed by making periodic payments, often in multiple installments, according to a predetermined schedule.
3) Purchase in the open market: The company can buy back its own debentures from the open market if they are available for purchase.
4) By conversion into shares or new debentures: Debenture holders may have the option to convert their debentures into either equity shares or new debentures issued by the company.