A company can raise funds through issue of debentures, which bear a ________ rate of interest.

fixed

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fluctuating

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higher

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lower

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Solution

The correct option is A fixed
Debentures can be issued by a company to raise funds as long term debt capital, which the company promises to return back on a fixed rate of interest.

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Similar questions

Q22. Consider the following statements:

1. Non-convertible debentures are used as tools to raise long-term funds by companies through a public issue.

2. To compensate for this drawback of non-convertibility, lenders are usually given a higher rate of return compared to convertible debentures.

Which of the following statements are correct?

With the issue of debentures, the capacity of a company to further borrow funds reduces.

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