Which of the following is NOT one of the way for redeeming debentures by a company?
Answer & explanation
Correct answer: option 4
The correct answer is option 4- Conversion into bonds.
* Conversion into bonds is not a way of redeeming debenture because bonds are interchangeable word for debenture.
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.