Match List-I with List-II.
| List-1 (Type of Debentures) |
List-II (Characteristic of Debenture) |
| (A) Secured Debentures | (I) do not have a specific charge on assets of the company |
| (B) Redeemable Debentures | (II) do not carry a specific rate of interest |
| (C) Zero Coupon Rate Debentures | (III) are payable on the expiry of the specific period |
| (D) Unsecured Debentures | (IV) a charge is created on the assets of the company |
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → (A)-(IV), (B)-(III), (C)-(II), (D)-(I)
Debentures are grouped by security, by tenure and by coupon rate, and each type is named after the feature that sets it apart.
(A) Secured Debentures — this matches (IV) a charge is created on the assets of the company. The charge protects the holders if the company defaults.
(B) Redeemable Debentures — this matches (III) are payable on the expiry of the specific period. They are repaid at the end of their term.
(C) Zero Coupon Rate Debentures — this matches (II) do not carry a specific rate of interest. They are issued at a large discount instead, and the discount is the holder’s return.
(D) Unsecured Debentures — this matches (I) do not have a specific charge on assets of the company. The holders are like ordinary creditors.
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