Analyze the case given below and answer the questions.
Anil Technologies limited company issued 5,000, 9% Debentures of ₹100 each at a premium of ₹20 payable as follows:
1. ₹40 including premium of ₹10 on application
2. ₹40 including premium of ₹10 on allotment
3. Balance on first and final call
Applications were received for 5,000 debentures and allotment was made to all the applicants. All the calls were made and amounts received.
What does 9% stand for as written along with the debenture?
Answer & explanation
Correct answer: option 2
The correct answer is option 2- Rate of interest.
In 9% debentures the "9%" written along with a debenture refers to the rate of interest. A debenture is a type of debt instrument used by companies and governments to raise capital, and the percentage indicates the annual interest rate the issuer will pay to the debenture holders. So, in this case, the 9% is the rate of interest.