Question : When a Company takes a loan from a Bank or from some other party, the Company may have to issue debentures as a subsidiary or secondary security in addition to the principal security known as --------
Option 1: For cash consideration
Option 2: For other then cash consideration
Option 3: Collateral securities
Option 4: None of the above
Correct Answer: Collateral securities
Solution : Answer = Collateral securities.
Collateral securities are additional assets pledged by a borrower to secure a loan. When a company takes a loan and offers debentures as secondary security, these debentures serve as collateral securities. They provide an extra layer of assurance to the lender in case the primary security is insufficient to cover the loan.
Hence, the correct option is 3.
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