Issue and Redemption of Debentures — Important Questions
Madhya Pradesh Board · Class 12 · Accountancy
98 important questions from Issue and Redemption of Debentures for Madhya Pradesh Board Class 12 Accountancy, with answers.
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Important Questions from Issue and Redemption of Debentures
Which of the following are characteristics of debentures?
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Written acknowledgment of debt, Fixed rate of interest, Repayment of principal after specified period
Debentures are written acknowledgments of debt with fixed interest rates and specified repayment periods. Unlike shares, debentures do not carry voting rights and pay interest (not dividends).
When debentures are issued at Rs. 95 for a face value of Rs. 100, they are issued:
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At discount
When debentures are issued below their face value (Rs. 95 for Rs. 100), they are issued at discount. The difference of Rs. 5 is the discount.
Which of the following are methods of redemption of debentures?
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Payment in lump sum, Payment in installments, Purchase in open market, Conversion into shares
There are four main methods of redemption: lump sum payment, installment payments, purchase from open market, and conversion into shares or new debentures.
Zero coupon rate debentures are issued:
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At substantial discount
Zero coupon rate debentures do not carry specific interest rate, so they are issued at substantial discount to compensate investors. The difference between nominal value and issue price serves as interest.
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