Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Issue and Redemption of Debentures

Question:

Naked debenture are also known as:

Options:

Perpetual debentures

Deep Discount Bond

Mortgage debenture

Unsecured debenture

Correct Answer:

Unsecured debenture

Explanation:

The correct answer is Option (4) - Unsecured debenture.

Unsecured debentures lack a specific claim or lien on the assets of the company. In the event of default, it is possible for a floating charge to be created on these debentures, but it's important to note that unsecured debentures with this feature are not commonly issued. These debentures are also called naked debentures.