Q1: 1. When a company issues debentures, it is essentially

• A) Borrowing funds from shareholders
• B) Borrowing funds from banks
• C) Borrowing funds from the public
• D) Investing in the stock market

Q2: 2. Which of the following is true about redeemable debentures?

• A) They cannot be redeemed before maturity
• B) They can be converted into equity shares
• C) They are repayable by the company after a certain period
• D) They have no maturity date

Q3: 3. What is the purpose of issuing debentures by a company?

• A) To increase share capital
• B) To raise long-term funds
• C) To pay dividends to shareholders
• D) To reduce liabilities

Q4: 4. Redemption of debentures refers to

• A) Issuing new debentures
• B) Repaying the debenture holders at maturity
• C) Converting debentures into equity shares
• D) Cancelling debentures before maturity

Q5: 5. Which of the following is a source of funds for the redemption of debentures?

• A) Borrowing from banks
• B) Sale of fixed assets
• C) Issue of bonus shares
• D) Payment of dividends

Q6: 6. A company can redeem debentures by

• A) Issuing fresh equity shares
• B) Borrowing more funds from banks
• C) Investing in new projects
• D) Using its reserves and surplus

Q7: 7. What happens if a company fails to redeem debentures on time?

• A) Debenture holders become shareholders
• B) Debenture holders lose their investment
• C) Company declares bankruptcy
• D) Company faces legal consequences

Q8: 8. Which financial statement reflects the redemption of debentures?

• A) Income statement
• B) Cash flow statement
• C) Balance sheet
• D) Statement of changes in equity

Q9: 9. How does the redemption of debentures affect a company's debt-equity ratio?

• A) Increases the debt-equity ratio
• B) Decreases the debt-equity ratio
• C) Does not impact the debt-equity ratio
• D) Makes the ratio negative

Q10: 10. Which of the following is a reason for issuing debentures over equity shares?

• A) Lower cost of capital
• B) Voting rights for debenture holders
• C) No obligation to repay debentures
• D) Limited liability for debenture holders

Q11: 11. If a company issues debentures at a premium, it means

• A) Debentures are issued at a discount
• B) Debentures are issued at face value
• C) Debentures are issued above face value
• D) Debentures are not redeemable

Q12: 12. Redemption of debentures is usually done at

• A) Face value
• B) A discount to face value
• C) A premium to face value
• D) Par value

Q13: 13. What is the impact of issuing debentures on a company's interest expense?

• A) Increases interest expense
• B) Decreases interest expense
• C) No impact on interest expense
• D) Converts interest expense to dividends

Q14: 14. Which of the following is a disadvantage of issuing debentures?

• A) No fixed interest payments
• B) Dilution of ownership control
• C) No maturity date
• D) Increase in share price

Q15: 15. The process of converting debentures into equity shares is known as

• A) Redemption
• B) Conversion
• C) Issuance
• D) Amortization

Q16: 16. When debentures are secured by company assets, it is known as

• A) Secured debentures
• B) Unsecured debentures
• C) Convertible debentures
• D) Redeemable debentures

Q17: 17. If a company issues debentures at a discount, it means

• A) Debentures are issued at face value
• B) Debentures are issued below face value
• C) Debentures are issued above face value
• D) Debentures are not redeemable

Q18: 18. Which financial ratio is affected by the redemption of debentures?

• A) Current ratio
• B) Return on investment
• C) Earnings per share
• D) Debt to equity ratio

Q19: 19. What is the legal document that outlines the terms of debenture issuance?

• A) Memorandum of Association
• B) Articles of Association
• C) Prospectus
• D) Debenture Deed

Q20: 20. If a company chooses to redeem debentures by buying them back from the open market, it is known as

• A) Call option
• B) Put option
• C) Buyback
• D) Reverse merger

Q21: 21. Which regulatory authority oversees the issue and redemption of debentures in a company?

• A) Securities and Exchange Board of India (SEBI)
• B) Reserve Bank of India (RBI)
• C) Ministry of Corporate Affairs
• D) National Stock Exchange (NSE)

Q22: 22. What is the term used for the interest paid on debentures?

• A) Dividend
• B) Coupon
• C) Royalty
• D) Rent

Q23: 23. If a company issues debentures with no collateral, it is known as

• A) Secured debentures
• B) Unsecured debentures
• C) Convertible debentures
• D) Redeemable debentures

Q24: 24. Which of the following is a reason for redeeming debentures before maturity?

• A) To incur higher interest costs
• B) To strengthen the company's financial position
• C) To delay repayment obligations
• D) To reduce shareholder wealth

Q25: 25. The process of issuing debentures involves

• A) Borrowing funds from banks
• B) Selling shares to the public
• C) Issuing debt securities to investors
• D) Acquiring assets from suppliers