2 Views

Question : Case Study: UVW Industries - Sustainable Financing for Green Initiatives

UVW Industries is a company committed to sustainable practices and is undertaking environmentally friendly initiatives. The company is exploring various sources of business finance to support its green projects.

Questions : Different Sources of Finance

How do debentures differ from equity shares in terms of ownership and returns?

Option 1: Debentures provide ownership rights
  

Option 2: Debentures pay fixed dividends
    

Option 3: Equity shares have fixed interest rates

   

Option 4: Equity shares represent short-term borrowing


Team Careers360 23rd Jan, 2024
Answer (1)
Team Careers360 24th Jan, 2024

Correct Answer: Debentures pay fixed dividends


Solution : The correct answer is (b) Debentures pay fixed interest

This statement is correct. Debentures pay fixed interest to debenture holders, not dividends. The interest rate is predetermined and agreed upon at the time of issuing the debentures. Debentures are considered to be a safer investment than equity shares, as debenture holders have a higher claim on the company's assets in the event of liquidation. However, this also means that debenture holders earn a lower return than equity shareholders.

Related Questions

Amity University, Noida Law A...
Apply
Admissions open for B.A. LL.B (Hons) , B.A. LL.B , BBA LL.B.(Hons) , B.Com.LL.B. (Hons.)
Jindal Global Law School Admi...
Apply
Ranked #1 Law School in India & South Asia by QS- World University Rankings | Merit cum means scholarships | Application Deadline: 31st Jan'25
TAPMI Jaipur MBA Admissions 2025
Apply
67 Years of Established Legacy | Ranked #79 in India by NIRF | Among the only few top 100 B-Schools currently accepting applications
UPES Integrated LLB Admission...
Apply
Ranked #28 amongst Institutions in India by NIRF | Ranked #1 in India for Academic Reputation by QS University Rankings | 16.6 LPA Highest CTC
Chandigarh University Admissi...
Apply
Ranked #1 Among all Private Indian Universities In QS Asia Rankings 2025 | Scholarships worth 210 CR
Great Lakes PGPM & PGDM 2025
Apply
Admissions Open | Globally Recognized by AACSB (US) & AMBA (UK) | 17.3 LPA Avg. CTC for PGPM 2024 | Application Deadline: 1st Dec 2024
View All Application Forms

Download the Careers360 App on your Android phone

Regular exam updates, QnA, Predictors, College Applications & E-books now on your Mobile

150M+ Students
30,000+ Colleges
500+ Exams
1500+ E-books