Question

Issue of debentures as collateral securities' means issue of such debentures as _________.

• A. Subsidiary security
• B. Principal security
• C. In lieu of principal security
• D. None of the above

Answer 1

Answer: (A)

Subsidiary security

Issue of Debentures as Collateral. Debentures issued as collateral security is secondary or parallel security for the original loan taken by the company. The lender can realize the collateral security in case borrower fails to make the payment of the original loan.

A Collateral Security is a Subsidiary Security.