Question

A debenture holder is entitled to:

• A. Fixed dividend
• B. Share in profit
• C. Voting rights in the company
• D. Interest at the fixed rate

Hint:

Debenture holders are creditors of the company, and their entitlement is limited to fixed interest payments, not ownership or profits.

Answer 1

The Correct Option is D

Step 1: Understanding the entitlement of debenture holders.
Debenture holders are creditors of the company and are entitled to receive interest at a fixed rate, irrespective of the company's profit or loss. They do not have voting rights or any ownership stake in the company.

Step 2: Differentiating between debenture holders and shareholders.
Unlike equity shareholders, debenture holders are not entitled to a share in the company's profits or decision-making rights. Their primary benefit is the fixed interest payment as agreed upon in the terms of the debenture.