Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Issue and Redemption of Debentures

Question:

In terms of repayment, when can a debenture mature?

Options:

Only after a specified period

Only at the option of the company

Only at fixed intervals

All of the above

Correct Answer:

All of the above

Explanation:

A debenture can mature under various circumstances, and all of the options mentioned in the answer are correct:
a) A debenture can mature after a specified period: This means that the debenture holder is entitled to receive the principal amount at the end of a predetermined period, which is typically specified in the debenture instrument.
b) A debenture can mature at the option of the company: Some debentures may include a provision that allows the company to redeem or repay the debenture at its discretion before the specified maturity date. This gives the company flexibility in managing its debt.
c) A debenture can mature at fixed intervals: In some cases, debentures may mature in installments at regular intervals over a specified period. This means that a portion of the principal amount is repaid at predetermined intervals until the entire debenture is redeemed.