Question

Debenture holders are entitled to get _________. (dividend/interest)

Hint:

Debenture holders receive fixed interest payments, while shareholders receive dividends based on company profits.

Answer 1

Step 1: Understanding Debenture Holders' Rights.
Debenture holders are creditors to the company. They lend money to the company and, in return, the company is obligated to pay interest on their investments. The interest is typically fixed and paid periodically (e.g., annually or semi-annually).
Step 2: Understanding Dividends and Interest.
- Interest is the compensation paid to debenture holders (creditors) for using their money. The rate of interest is fixed when the debenture is issued. - Dividend is the share of the profit distributed to the shareholders (owners) of the company. It is based on the profit of the company and is not guaranteed. Step 3: Conclusion.
Since debenture holders are creditors, they are entitled to receive interest, not dividends. Therefore, the correct answer is interest.