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Q21. Consider the following statements:

1. Debentures are long-term financial instruments which acknowledge a debt obligation towards the issuer.

2. The debentures which can’t be converted into shares or equities are called non-convertible debentures (or NCDs).

Which of the following statements are correct?


  1. a) 1 only

  2. b) 2 only

  3. c) Both 1 and 2

  4. d) None of the above


Solution

The correct option is C

c) Both 1 and 2


Debentures are long-term financial instruments which acknowledge a debt obligation towards the issuer. Some debentures have a feature of convertibility into shares after a certain point of time at the discretion of the owner. The debentures which can’t be converted into shares or equities are called non-convertible debentures (or NCDs).

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