Question : Debenture holders have first right in the event of a company's liquidation for:
Option 1: Interest Amount
Option 2: Principal Amount
Option 3: Both (a) and (b)
Option 4: None of the above
Correct Answer: Both (a) and (b)
Solution : If a Company gets liquidated then the debenture holder gets priority as compared to other Shareholder. Shareholders are entitled to receive dividends, which is a share in the profits of the company. Since they have lent money to the company, debenture holders are entitled to receive interest. Despite generating profits, a company may choose not to pay dividends to its shareholders.
Hence the correct answer is Option 3