1. ‘Zero-Coupon Rate Debentures’ are known as-

1. These debentures are such debentures within which all details comprising addresses, names and particulars of holding of the debenture holders are filed in a register kept by the enterprise.
2. They do not have a particular charge on the assets of the enterprise
3. These debentures are also called as Perpetual Debentures as the company doesn’t give any attempt for the repayment of money acquired or borrowed by circulating such debentures.
4. Debentures which are changeable to equity shares or in any other security either at the choice of the enterprise or the debenture holders.
5. These debentures don’t normally carry a particular rate of interest.

Option “5” is correct.
Zero-Coupon Rate Debentures- These debentures don’t normally carry a particular rate of interest. In order to restore the investors, such type of debentures is circulated at a considerable discount and the difference between the nominal value and the circulated price is treated as the amount of interest associated to the duration of the debentures.
2. When all the debentures are redeemed, the balance left in the debenture sinking fund account is transferable to-

1. Debentures a/c
2. Sinking fund Investment, a/c
3. Capital redemption reserve
4. General reserve
5. Debenture redemption reserve

Option “4” is correct.
· The balance of the Debentures Sinking Fund after redemption of debentures is transferred to the General Reserve account.
· It is the amount which is kept separately out of redeemed amount from debentures, that is why it is transferred to the general reserve account.
3. Which one of the following is NOT the method of debt redemption?

1. Refunding
2. Crowding
3. Sinking fund
4. Conversion
5. Terminable Annuities

Option “2” is correct.
Methods that are adopted for redemption of public debt are:
1. Refunding
2. Conversion
3. Surplus budgets
4. Sinking fund
5. Terminable annuities
6. Additional Taxation
7. Capital Levy
8. Surplus Balance of Payments
4. Which of the following can be used by only large companies enjoying high credit rating and sound financial health to raise short term finance?

1. Trade credit
2. Deferred income
3. Commercial Paper
4. Account receivable credit
5. Certificate of Deposit

Option “3” is correct.
· Commercial Paper (CP) is an unsecured, short-term debt money market instrument issued in the form of a promissory note with a fixed maturity of rarely more than 270 days.
· Commercial paper is usually issued at a discount from face value and reflects prevailing market interest rates.
· In simple terms, it can be bought and sold because its buyers and sellers have some degree of confidence that it can be successfully redeemed later for cash, based on their assessment of the creditworthiness of the issuing company.
5. To what rate does the law limit the commission payable on the issue of debentures?

1. 2%
2. 2 ½%
3. 3 ½%
4. 4 ½%
5. 5 ½ %

Option “2” is correct.
· In the case of shares, 5% of the price at which the shares are issued or the amount or rate authorized by the Articles, whichever is less.
· In the case of debentures, 2½% of the price at which the debentures are issued or this amount or rate authorized by the Articles, whichever is less.
6. __________ debentures are unregistered debentures that can be transferred by mere delivery.

1. Secured Debentures
2. Registered Debentures
3. Specific Coupon Rate Debentures
4. Bearer debentures
5. Unsecured Debentures

Option “4” is correct.
Bearer debentures are unregistered debentures that can be transferred by mere delivery.
7. Loss on issue of debentures earns the difference between the Redeemable Value and the Face Value. It is treated as a-

1. Intangible Asset
2. Current Asset
3. Current Liability
4. Miscellaneous Expenditure
5. Any of the above

Option “4” is correct.
Loss on issue of debentures earns the difference between the Redeemable Value and the Face Value. It is treated as a Miscellaneous expenditure and is debited to “Loss on Issue of Debentures Account.”
8. Which of the following capital is a subscribed capital, the amount of which is paid by the investor?

1. Issued Share Capital
2. Subscribed Share Capital
3. Paid up capital
4. Authorized Share Capital
5. None of these

Option “3” is correct.
Paid-up capital is the amount of money a company has received from shareholders in exchange for shares of stock. Paid-up capital is created when a company sells its shares on the primary market directly to investors.
9. ‘Own Debentures Account’ is referred as-

1. These debentures don’t normally carry a particular rate of interest
2. When a company buys its own debentures for investment purposes and not for cancellation.
3. These debentures are those debentures that are due on the cessation of the time frame either in a lump-sum or in instalments during the lifetime of the enterprise.
4. The debentures which can’t be changed into shares or in other securities.
5. All of the above

Option “2” is correct.
‘Own Debentures Account’, is opened in the books when a company buys its own debentures for investment purposes and not for cancellation.
10. Convertible Debentures are known as-

1. These debentures don’t normally carry a particular rate of interest
2. When a company buys its own debentures for investment purposes and not for cancellation.
3. These debentures are those debentures that are due on the cessation of the time frame either in a lump-sum or in instalments during the lifetime of the enterprise.
4. Debentures which are changeable to equity shares or in any other security either at the choice of the enterprise or the debenture holders
5. All of the above

Option “4” is correct.
Debentures which are changeable to equity shares or in any other security either at the choice of the enterprise or the debenture holders are called convertible debentures.

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