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Which of the following is false with respect to debentures
- a)They can be issued for cash
- b)They can be issued for consideration other than cash
- c)They can be issued as collateral security
- d)They can be issued in lieu of dividends
Correct answer is option 'D'. Can you explain this answer?
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Which of the following is false with respect to debenturesa)They can b...
Debentures: False Statement Explanation
Issuance for Cash:
- Debentures can indeed be issued for cash, as this is a common way for companies to raise funds.
- Investors purchase debentures in exchange for cash, which the company can then use for various purposes such as expansion or working capital.
Issuance for Consideration Other Than Cash:
- Debentures can also be issued for consideration other than cash.
- This may include assets, services, or any other form of value that the company and the debenture holders agree upon.
Issuance as Collateral Security:
- Debentures can be issued as collateral security.
- This means that the debentures are backed by specific assets of the company, providing an additional layer of security for the debenture holders.
Issuance in Lieu of Dividends:
- The false statement in the given options is that debentures can be issued in lieu of dividends.
- Debentures are a form of debt instrument and are not issued as a substitute for dividends. Dividends are typically paid out to shareholders as a share in the company's profits, while debentures represent a company's debt obligation to the debenture holders.
Issuance for Cash:
- Debentures can indeed be issued for cash, as this is a common way for companies to raise funds.
- Investors purchase debentures in exchange for cash, which the company can then use for various purposes such as expansion or working capital.
Issuance for Consideration Other Than Cash:
- Debentures can also be issued for consideration other than cash.
- This may include assets, services, or any other form of value that the company and the debenture holders agree upon.
Issuance as Collateral Security:
- Debentures can be issued as collateral security.
- This means that the debentures are backed by specific assets of the company, providing an additional layer of security for the debenture holders.
Issuance in Lieu of Dividends:
- The false statement in the given options is that debentures can be issued in lieu of dividends.
- Debentures are a form of debt instrument and are not issued as a substitute for dividends. Dividends are typically paid out to shareholders as a share in the company's profits, while debentures represent a company's debt obligation to the debenture holders.
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Which of the following is false with respect to debenturesa)They can be issued for cashb)They can be issued for consideration other than cashc)They can be issued as collateral securityd)They can be issued in lieu of dividendsCorrect answer is option 'D'. Can you explain this answer?
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