Identify those debentures on which no interest will be paid/provided.
This question was previously asked in
Shift 29/05/2023 3:30 PM - 6:30 PM
Correct Answer
Detailed Explanation
Interest is not paid on collateral debentures, also known as zero-coupon debentures. These debentures are structured in a way that does not involve regular interest payments to bondholders.
Instead of receiving periodic interest payments, investors in collateral or zero-coupon debentures purchase them at a discounted price (less than the face value) and receive the face value when the debentures mature. The difference between the purchase price and the face value of the debentures represents the effective interest earned over the life of the investment.
The absence of regular interest payments is a distinctive feature of zero-coupon debentures, and they are appealing to investors who are looking for a lump-sum payment at maturity rather than periodic interest income. However, it's essential for investors to be aware of the tax implications and cash flow considerations associated with this type of investment. The tax treatment of zero-coupon debentures can vary depending on local tax laws.
Get Dubuddy App
Practice on the go with our mobile app
More CUET Questions
Match List I with List II LIST I LIST II A. Transfer of accumulated profits I. Realisation account B. Unrecorded asset sold on dissolution of firm II. Profit and Loss Account C. Manager's commission III. Profit and Loss Appropriation Account D. Partner's commission IV. Partner's Capital account Choose the correct answer from the options given below:
Which of the following will be shown on the credit side of Deceased Partner A/C?
A. Revaluation Gain Share
B. Goodwill written off
C. Share of profit till date of death
D. Drawings till date of death
E. Interest on capital till date of death
Choose the correct answer from the options given below:
Every company analyse its earning capacity of the business which is outcome of utilisation of resources employed in the business. To analyse profitability company can use:
A. Dividend Payout Ratio
B. Return on Net Worth
C. Gross Profit Ratio
D. Quick Ratio
E. Inventory Turnover Ratio
Choose the choose answer from the option given below:
Match List I with List II LIST I LIST II A. Interest charges I. Employees Benefit Expenses B. Sale of services II. Other incomes C. Salary III. Revenue from Operations D. Dividend Income IV. Finance cost Choose the correct answer from the options given below:
Test Series
CUET Subjects
Your CUET Journey Starts with DuBuddy
CUET ki Practice Means DuBuddy Pe Practice