Which of the following are the ways for redeeming debentures?
A) Payment in lump sum
B) Payment in installments
C) Purchase in the open market
D) Conversion into bonds
E) Investment conversion
F) Conversion in shares
Choose the correct answer from the options given below.
Answer & explanation
Correct answer: option 1
The correct answer is option 1- ABCF.
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.
So, the correct answer is ABCF.