ABC Ltd decides to redeem 1 000 10 Debentures of 100 each redeemable at 10 Premium The Company will ...........

Principles of Accounting & Financial Management Share capital and debentures

ABC Ltd. decides to redeem 1,000, 10% Debentures of ?100 each redeemable at 10% Premium. The Company will have to invest in specified securities at least :

?15,000

?16,500

?25,000

?27,500

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Explanation:

When the debenture issuing company create a reserve for the process of redemption of debentures then it is known as Debentures Redemption Investment. Generally, the investment amount is at least 15% of the nominal value of the debentures to be redeemed during the financial year. To create DRR, there are some specific securities in which a company requires to invest the amount.