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When debentures are issued as collateral security for a loan then such debentures holders are entitled for: 
  • a)
    Interest on the amount of loan 
  • b)
     Interest on the amount of debentures 
  • c)
     No interest amount 
  • d)
    Either (a) or (b) 
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
When debentures are issued as collateral security for a loan then such...
Debentures as Collateral Security

Debentures are long-term debt instruments that are issued by companies to raise funds. When these debentures are issued as collateral security for a loan, the lender holds them as security against the loan. In such a case, the debenture holders are not entitled to any interest on the debentures.

Explanation

The debentures are not issued for investment purposes, but as collateral security for a loan. Hence, the lender holds the debentures as security against the loan and is entitled to the interest on the loan. The debenture holders do not have any right to the interest on the loan or the debentures.

Conclusion

In conclusion, debentures issued as collateral security for a loan do not entitle the debenture holders to any interest. The lender holds the debentures as security against the loan and is entitled to the interest on the loan. The debenture holders do not have any right to the interest on the loan or the debentures.
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When debentures are issued as collateral security for a loan then such debentures holders are entitled for:a)Interest on the amount of loanb)Interest on the amount of debenturesc)No interest amountd)Either (a) or (b)Correct answer is option 'C'. Can you explain this answer?
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