14 Views

Question : Case Study: XYZ Ltd. - Raising Finance for Expansion

XYZ Ltd. is a growing company that manufactures electronic gadgets. The company has been successful in the market and is planning to expand its operations. To finance this expansion, XYZ Ltd. is considering various sources of business finance.

Questions : Debentures and Financial Instruments

What is the primary difference between debentures and equity shares?

 

Option 1: Debentures provide ownership rights
 

Option 2: Equity shares pay fixed interest
 

Option 3: Debentures are issued to employees only

  

Option 4: Equity shares require repayment at maturit


Team Careers360 7th Jan, 2024
Answer (1)
Team Careers360 23rd Jan, 2024

Correct Answer: Debentures provide ownership rights
 


Solution : The correct answer is (a) Debentures provide ownership rights

Debentures represent a form of debt where the holders (debenture holders) are creditors to the company and do not possess ownership rights in the company. They are entitled to receive a fixed rate of interest and the repayment of the principal amount at maturity.

On the other hand, equity shares represent ownership in the company and provide shareholders with ownership rights, including voting rights and the right to share in the company's profits (through dividends). Unlike debentures, equity shares do not involve fixed interest payments or repayment at maturity.

Related Questions

Presidency University MBA Adm...
Apply
NAAC A+ Accredited | Highest CTC 10 LPA | Top Recruiters : Amazon, Accenture, KPMG, EY, Capgemini & many more
UPES | BBA Admissions 2026
Apply
#36 in NIRF, NAAC ‘A’ Grade | 100% Placement, up to 30% meritorious scholarships
IMT Ghaziabad PGDM Admissions...
Apply
AACSB, NBA & SAQS Accredited | H-CTC 41.55 LPA | Merit Based Scholarship
MYRA School of Business PGDM ...
Apply
75+ Companies Visited | Average CTC 9.06 LPA | Highest CTC 35 LPA
SPJIMR Mumbai PGDM Admissions...
Apply
Ranked No. 3 Business School in India and no.35 in world by Financial Times MiM 2025 Ranking | Highest CTC: INR 89 LPA
Symbiosis MBA - SNAP 2025
Apply
1 Exam accepted by 17 Top Symbiosis Institutes for 29 MBA programmes.
View All Application Forms

Download the Careers360 App on your Android phone

Regular exam updates, QnA, Predictors, College Applications & E-books now on your Mobile

150M+ Students
30,000+ Colleges
500+ Exams
1500+ E-books