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Redemption of Debentures

As fixed char...

Question

As fixed charge instruments, debentures put a _________ burden on the earnings of a company.

A

Permanent

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B

Temporary

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C

Higher

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D

Lower

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Solution

The correct option is A Permanent
Debentures bear a fixed rate of interest to be paid at a future date to the creditors. As fixed charge instruments, debentures put a permanent burden of interest payments on the earnings of a company.

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