A company can issue its debentures at _________a)Par onlyb)Premium and Discount onlyc)Par, Premium and Discountd)Par and Premium onlyCorrect answer is option 'C'. Can you explain this answer?

Question

Answer

Yes company can issues it's debentures at par premium and discount but it can't be forfeited like share.

Answer

Yes it can issue in all the way

Answer

DEBENTURES ---A debenture is a type of DEBT INSTRUMENT that is not secured by physical assets or collateral. Debentures are backed only by the GENERAL CREDIT WORTHINESS and reputation of the issuer. Both corporations and governments frequently issue this type of bond to secure capital.
......... DEBENTURES are said to be issued AT PAR when the amount collected for it is equal to the nominal value (face value) of the debentures; for example, issueof Rs. 1,000 debenture for Rs. 1,000.

..........If DEBENTURES are issued at a price more than its nominal value (face value) such an issue is called ISSUE AT a PREMIUM. The premium on issue of debentures must be transferred to a separate account and is to be shown in the assets side of the balance side. This premium is to be deferred expenditure over the life of the debenture. The amount of each year which is deferred is to be debited in profit and loss account.

........ ISSUE AT DISCOUNT... When the debentures are issued at below face value, such issue of debentures is known as a discount issue. Like, say for example the debenture has a nominal value of 100/- but is issued for 90/-. Then such debentures are said to be issued at discount.

Answer

Understanding Debenture Issuance
Debentures are long-term financial instruments used by companies to raise capital. They can be issued at different pricing levels which impacts the way they are received in the market.
Types of Debenture Issuance
1. Par Value
- Issued at face value.
- If a debenture has a nominal value of $100, it will be sold for exactly $100.
- Ideal for companies with strong credit ratings.
2. Premium
- Issued above par value.
- For instance, a debenture with a nominal value of $100 may be sold for $110.
- Typically occurs when the interest rate on the debenture is higher than current market rates, making it attractive to investors.
3. Discount
- Issued below par value.
- A debenture with a nominal value of $100 might be sold for $90.
- This can happen when the company has a lower credit rating or when market interest rates are higher than the debenture’s interest rate.
Conclusion
The correct option is C) Par, Premium, and Discount because companies can issue their debentures at all three price points depending on market conditions, investor demand, and the company’s financial health. Each option serves a different strategic purpose, allowing companies flexibility in capital raising.

Answer

A company can issue its shares at par, premium and discount. But shares cannot be issued at discount.

Answer

Par, premium & Discount

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