Which of the following statements about debentures is FALSE?
(A) Debenture is a part of owned capital.
(B) Debentures cannot be converted into shares.
(C) Redeemable debentures are those debentures, which are payable on the expiry of the specific period.
(D) Debentures cannot be issued at a premium.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → (A), (B) and (D) only
A debenture is a loan to the company, carries a fixed rate of interest, and comes in many forms.
(A) Debenture is a part of owned capital. False. A debenture is an acknowledgement of debt, so it is part of borrowed capital; shares make up owned capital.
(B) Debentures cannot be converted into shares. False. Convertible debentures can be turned into equity shares or other securities.
(C) Redeemable debentures are those debentures, which are payable on the expiry of the specific period. True. That is what makes them redeemable.
(D) Debentures cannot be issued at a premium. False. A Rs. 100 debenture can be issued for Rs. 110; the Rs. 10 premium is credited to Securities Premium.
NCERT (2026-27 edition):
NCERT (2026-27 edition):
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