Multiple choice

The rate of interest paid by a company on debentures issued by it depends on

  1. the stock market situation

  2. SEBI guidelines

  3. the company's credit rating

  4. the amount of money being raised
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The interest rate on debentures depends primarily on the company's credit rating, which reflects its ability to repay the debt. Higher-rated companies can borrow at lower interest rates due to lower perceived risk, while lower-rated companies must offer higher rates to attract investors. SEBI guidelines govern disclosure but don't set rates, and market conditions or amount raised have secondary influence compared to credit risk.

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