Practicing Success
If the Debenture Redemption Investment is more or less than 15% of the value of debentures to be redeemed, what action is taken? |
The excess amount is used for company expansion The company is penalized for not meeting the 15% requirement Excess investment is realized, and a shortfall is invested to meet the requirement The excess amount is distributed as bonuses to employees |
Excess investment is realized, and a shortfall is invested to meet the requirement |
If the Debenture Redemption Investment is more or less than 15% of the value of debentures to be redeemed, the company must take corrective actions to ensure compliance with the requirement. Specifically: If the investment exceeds 15% of the value of debentures to be redeemed, the excess amount is realized. In other words, the company may withdraw or utilize the surplus funds for other purposes. If the investment is less than 15% of the value of debentures to be redeemed, the company must invest additional funds to meet the required 15%. The goal is to maintain a balance so that the company has adequate funds available for debenture redemption without overinvesting or falling short of the required percentage. This practice helps ensure the company's financial stability and ability to meet its obligations to debentureholders. |