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 Which of the following statements is false?
  • a)
    A company can issue convertible debentures 
  • b)
    Debentures cannot be secured 
  • c)
    A company can issue redeemable debentures 
  • d)
    Debentures have no right to participate in profits over and above their fixed interest 
Correct answer is option 'B'. Can you explain this answer?
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Which of the following statements is false?a)A company can issue conve...
Debentures Overview
Debentures are long-term debt instruments issued by companies to raise funds from the public. They are a form of loan that the company promises to repay at a specified date along with periodic interest payments.

Debentures Features
- Convertible Debentures: A company can issue convertible debentures, which can be converted into equity shares at a later date based on pre-determined terms.
- Redeemable Debentures: A company can issue redeemable debentures, which are to be repaid to the debenture holders after a specified period.
- Profit Participation: Debentures typically have no right to participate in profits over and above their fixed interest. Debenture holders are entitled to receive only the agreed-upon interest payments.

Secured Debentures
Contrary to option b, debentures can be secured by the company's assets. Secured debentures are backed by specific assets of the company, providing an added layer of security to the debenture holders. In the event of default by the company, secured debenture holders have a claim on the specified assets.
In conclusion, while debentures typically do not have the right to participate in profits beyond their fixed interest, they can indeed be secured by the company's assets. This adds an element of security for debenture holders, making them a relatively safe investment option.
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Which of the following statements is false?a)A company can issue convertible debenturesb)Debentures cannot be securedc)A company can issue redeemable debenturesd)Debentures have no right to participate in profits over and above their fixed interestCorrect answer is option 'B'. Can you explain this answer?
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