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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 debentures?a)They can ...
False Statement Regarding Debentures:
Therefore, the false statement is option D: They can be issued in lieu of dividends. Debentures are not issued in place of dividends, but rather as a means of raising long-term capital for the company.
Debentures are long-term debt instruments issued by companies to raise funds from the public. They have certain characteristics and features that differentiate them from other types of financial instruments. However, one of the statements provided is false with respect to debentures:
- A: They can be issued for cash - True. Debentures can be issued in exchange for cash, which is the most common method of raising funds.
- B: They can be issued for consideration other than cash - True. Debentures can also be issued in exchange for assets, such as land or machinery, or for services rendered.
- C: They can be issued as collateral security - True. Debentures can be secured by specific assets of the company, which serve as collateral in case of default.
- D: They can be issued in lieu of dividends - False. Debentures are not issued in lieu of dividends. Dividends are a share of profits distributed to shareholders, while debentures represent borrowed money that needs to be repaid with interest.
Therefore, the false statement is option D: They can be issued in lieu of dividends. Debentures are not issued in place of dividends, but rather as a means of raising long-term capital for the company.
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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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