Most companies raise long-term funds through debentures. Identify incorrect statements regarding debentures.
(A) Debenture holders enjoy voting rights.
(B) A company may issue different kinds of debentures, like Secured Debentures, Unsecured Debentures, Redeemable Debentures, Irredeemable Debentures, Convertible Debentures, Non-convertible Debentures.
(C) A debenture is a part of the owned capital.
(D) The return on Debenture is known as dividend.
Choose the correct answer from the options given below:
Most companies raise long-term funds through debentures. Identify incorrect statements regarding debentures.
(A) Debenture holders enjoy voting rights.
(B) A company may issue different kinds of debentures, like Secured Debentures, Unsecured Debentures, Redeemable Debentures, Irredeemable Debentures, Convertible Debentures, Non-convertible Debentures.
(C) A debenture is a part of the owned capital.
(D) The return on Debenture is known as dividend.
Choose the correct answer from the options given below:
Solution
Debenture holders are creditors, not owners: they carry no voting rights, so (A) is incorrect. Debentures form part of borrowed capital and not owned capital, so (C) is incorrect. Their return is interest, a fixed charge against profit, not dividend, so (D) is incorrect. Only (B), listing the recognised kinds of debentures, is correct.
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2026: 24 May Shift 1