Tag: non-institutional sources - long-term

Questions Related to non-institutional sources - long-term

A company can raise funds through issue of debentures, which bear a ________ rate of interest.

organisation of commerce and management sources of business finance - 2 debentures / bonds debentures non-institutional sources - long-term

  1. fixed

  2. fluctuating

  3. higher

  4. lower

Show answer
Correct Option: A
Explanation:

Debentures can be issued by a company to raise funds as long term debt capital, which the company promises to return back on a fixed rate of interest. 

Debenture holders are paid _________ stated amount of interest at specified intervals.

organisation of commerce and management sources of business finance - 2 debentures / bonds debentures non-institutional sources - long-term

  1. fixed

  2. fluctuating

  3. higher

  4. lower

Show answer
Correct Option: A
Explanation:

 Debenture holders are paid a fixed stated amount of interest at specified intervals. Public issue of debentures requires that the issue be rated by a credit rating agency.