......................................debentures are issued at a substantial discount and the difference between the nominal value and the issue price is treated as the amount of interest related to the duration of the debentures.

Zero Coupon Rate Debentures

The correct answer is option 2- Zero Coupon Rate Debentures.

Zero Coupon Rate Debentures: These debentures do not carry a specific rate of interest. In order to compensate the investors, such debentures are issued at substantial discount and the difference between the nominal value and the issue price is treated as the amount of interest related to the duration of the debentures.

OTHER OPTIONS

• Registered Debentures: Registered debentures have detailed information about debenture holders, including their names, addresses, and holdings, recorded in a company-maintained register. These debentures can only be transferred through a formal transfer deed.
• Bearer Debentures: Bearer debentures can be transferred simply by delivery, and the company does not maintain any records of the debenture holders. Interest payments on bearer debentures are made to whoever presents the attached interest coupon.
• Specific Coupon Rate Debentures: These debentures are issued with a predetermined interest rate, known as the coupon rate. This rate can be fixed or floating, with floating rates often tied to the bank rate.