Introduction to Debentures

What is one reason Daniel considers borrowing funds from the market?

• He plans to pay off all debts.

• He wants to increase his personal wealth.

• He needs money for expansion.

• He wants to buy a new company.

What is a key feature of debentures compared to financial institutions?

• They require no repayment.

• They offer variable interest rates.

• They are only available to large companies.

• They are a secured investment.

Why might an investor choose debentures over shares?

• Debentures offer voting rights.

• Debentures provide a fixed rate of return.

• Debentures have higher risk.

• Debentures are not affected by company liquidation.

What is a convertible debenture?

• A debenture that cannot be redeemed.

• A debenture with no interest rate.

• A debenture that can be converted into shares.

• A debenture that is only for short-term investment.

What is the difference between redeemable and irredeemable debentures?

• Irredeemable debentures offer higher interest rates.

• Redeemable debentures have a fixed maturity date.

• Irredeemable debentures are only for government use.

• Redeemable debentures cannot be converted into shares.

What is a non-convertible debenture?

• A debenture that can be converted into shares.

• A debenture that cannot be converted into shares.

• A debenture with no interest rate.

• A debenture that is only for short-term investment.

What is the advantage of issuing convertible debentures for a company?

• It guarantees higher profits.

• It eliminates the need for shareholders.

• It reduces interest liability over time.

• It increases the company's debt.

What does it mean for a debenture to be secured?

• It cannot be transferred.

• It is only available to private investors.

• It has no interest rate.

• It is backed by a company's assets.

How is priority determined when the same asset is mortgaged to multiple debenture holders?

• By the order of subscription.

• By the interest rate offered.

• By the amount of investment.

• By the company's discretion.

What is the main disadvantage of unregistered debentures?

• They are difficult to transfer.

• They are not recorded in company books.

• They offer no interest.

• They are only available to large investors.