BUISENESS MANAGEMENT
FINANCIAL MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Debenture is a creditorship security
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Ownership securities are represented by debentures
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Retained profit is an internal source of financing
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All of the above
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Detailed explanation-1: -"Debenture are completely unsafe” this statement is false because debenture holders are lenders for the company. So, company has to repay them after a limited time period.
Detailed explanation-2: -Debenture is a part of owned capital.
Detailed explanation-3: -Rest all the options mentioned for debentures are not true as they are not the owners of the company and receive the interests irrespective of the profit or losses. It is the equity shareholders who get money back only in the event of liquidation.
Detailed explanation-4: -They do not carry any voting rights because debenture holders are not owners of a company. In the event of liquidation, debenture holders are paid before preference shareholders and equity shareholders. Debentures can be broadly categorised into: Secured debentures – These are debentures that are backed with collateral.