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Cash Flow from Financing Activities

Debentures re...

Question

Debentures represent

(a) Fixed capital of the company

(b) Permanent capital of the company

(c) Fluctuating capital of the company

(d) Loan capital of the company

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Solution

Debentures are financial instruments used by companies to raise their long-term debt capital. Thus, debentures represent the loan capital of a company. Just as in the case of loans, the rate and time of payment of interest on debentures are fixed in advance.

Hence, the correct answer is option (d).

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