Debentures are preferred by investors who want _ income at ____ risk.

fluctuating, lesser

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fixed, lesser

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fixed, higher

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fluctuating, higher

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Solution

The correct option is B fixed, lesser
The difference between the face value of the debenture and its purchase price is the return to the investor. Hence it is preferred by investors who want fixed income at lesser risk. There is a greater risk when the earnings of the company fluctuate.

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Similar questions

Why would an investor prefer to invest in the debentures of a company rather than in its shares?

Q. Assertion :Preference shares capital is a more costly source of finance than debentures for profit-earning companies. Reason: Preference dividend is not a charge against profit under the Income Tax Act.

Q. When debentures are issued at a discount & redeemed at a premium, we route discount on issue of debentures a/c through on issue of debentures a/c.

Q. A __________ is a tax that takes away a higher proportion of one's income as the income rises.

Pass journal entries in the following cases:
(a) A Co.Ltd. issued ₹40,000; 12% Debentures at a premium of 5% redeemable at par.
(b) A Co.Ltd. issued ₹40,000; 12% Debentures at a discount of 10% redeemable at par.
(c) A Co.Ltd. issued ₹40,000; 12% Debentures at par redeemable at 10% premium.
(d) A Co.Ltd. issued ₹40,000; 12% Debentures at a discount of 5% and redeemable at 5% premium.
(e) A Co.Ltd. issued ₹40,000; 12% Debentures at a premium of 10% redeemable at 110%.

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Debentures are preferred by investors who want _______ income at __________ risk.

The correct option is B fixed, lesserThe difference between the face value of the debenture and its purchase price is the return to the investor. Hence it is preferred by investors who want fixed income at lesser risk. There is a greater risk when the earnings of the company fluctuate.

Debentures are preferred by investors who want _ income at ____ risk.

The correct option is B fixed, lesser
The difference between the face value of the debenture and its purchase price is the return to the investor. Hence it is preferred by investors who want fixed income at lesser risk. There is a greater risk when the earnings of the company fluctuate.