Question

Assertion (A): Debenture holders are also known as the owners of the company.
Reason (R): A company which raises funds through the issue of debentures bears a fixed rate of
interest.
(a) Both (A) and (R) are correct.
(b) Both (A) and (R) are incorrect.
(c) (A) is correct but (R) is incorrect.
(d) (A) is incorrect but (R) is correct.

Answer 1

Answer:

Both (A) and (R) are correct

Answer 2

The correct option is (d) (A) is incorrect but (R) is correct as the debenture holders are not the owners of the company.

• Debenture holders are not the owners of the company but the creditors of the company as they lend their money.
• The rate of interest on debentures is fixed and it is payable whether a company gain profits or not.
• Shareholders are termed to be the owners or the partners of the company as they own the company's shares.