Question : Which of the following statements is true?
Option 1: Interest on debentures is payable only when the Company earns profits.
Option 2: Debentures secured by a charge on assets of the company entitle the debenture holders to take possession of those assets even if their payment is made as per terms.
Option 3: Debentures secured by a floating charge on the assets of the company entitle their holders to receive their payment in priority to first charge holders from the sale of such assets.
Option 4: Deep Discount Bonds are issued at a price substantially below the maturity value.
Correct Answer: Deep Discount Bonds are issued at a price substantially below the maturity value.
Solution : Answer = Deep Discount Bonds are issued at a price substantially below the maturity value.
These debentures do not carry a specific rate of interest. In order to compensate the investors such debentures are issued at a substantial discount. The difference between the face value and the issue price is the total amount of interest related to the duration of debentures. Hence, the correct option is 4.
Question :
The debentures which are secured by either a fixed charge or a floating charge on the assets of the company. A charge on the assets of the
Question : Which of the following statements is not true?
Regular exam updates, QnA, Predictors, College Applications & E-books now on your Mobile