Multiple choice

Which of the following is false with respect to debentures?

  1. These can be issued for cash

  2. These can be issued for consideration other than cash

  3. These can be issued as collateral security

  4. These can be issued in lieu of dividends
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A debenture is a bond issued by a company under its seal, acknowledging a debt and containing provisions as regards repayment of the principal and interest. Debentures can be issued for cash, or for considerations other than cash or as a colleteral security.Dividends are paid out of profits to the owners (equity or preference shareholders) of the company and the issue od debentures is not to replace dividend paid by the company.

Keep practicing — related questions