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Question : Debenture holders have first right in the event of a company's liquidation for:

Option 1: Interest Amount

Option 2: Principal Amount

Option 3: Both (a) and (b)

Option 4: None of the above


Team Careers360 8th Jan, 2024
Answer (1)
Team Careers360 11th Jan, 2024

Correct Answer: Both (a) and (b)


Solution : If a Company gets liquidated then the debenture holder gets priority as compared to other Shareholder. Shareholders are entitled to receive dividends, which is a share in the profits of the company. Since they have lent money to the company, debenture holders are entitled to receive interest. Despite generating profits, a company may choose not to pay dividends to its shareholders.

Hence the correct answer is Option 3

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