Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Issue and Redemption of Debentures

Question:

Which of the following statement is correct about debenture?

Options:

A debenture holder is an owner of the company

A debenture holder can get his money back only on the liquidation of the company.

A debenture issued at a discount can be redeemed at a premium

A debenture holder received interest only in the event of profits.

Correct Answer:

A debenture issued at a discount can be redeemed at a premium

Explanation:

Depending upon the terms and conditions of issue and redemption of debentures, the following six situations are commonly found in practice.
(i) Issued at par and redeemable at par
(ii) Issued at discount and redeemable at par
(iii) Issued at a premium and redeemable at par
(iv) Issued at par and redeemable at a premium
(v) Issued at a discount and redeemable at a premium
(vi) Issued at a premium and redeemable at a premium