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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?
Verified Answer
Which of the following is false with respect to debentures?a)They can ...
False Statement Regarding 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
Answer: D
Detailed Explanation:
Debentures are a type of long-term debt instrument that companies issue to raise funds from the public. They are essentially loan agreements where the company promises to repay the principal amount along with interest to the debenture holders.
The false statement with respect to debentures is:
D: They can be issued in lieu of dividends
The other statements are true:
- A: They can be issued for cash: Companies can issue debentures in exchange for cash to raise capital.
- B: They can be issued for consideration other than cash: Debentures can also be issued in exchange for assets, securities, or other forms of consideration apart from cash.
- C: They can be issued as collateral security: Companies can secure debentures by providing collateral, such as property or assets, to the debenture holders.
However, debentures cannot be issued in lieu of dividends. Dividends are a distribution of profits to the shareholders of a company, and they are usually paid in the form of cash or additional shares. Debentures are a separate form of financing and do not replace dividends.
Therefore, option D is the false statement with respect to debentures.
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Which of the following is false with respect to debentures?a)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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