Consider the following points of differences between a share and a debenture 1 While share is the ca...........

Finance Financial Markets

Download Solution PDF

Consider the following points of differences between a share and a debenture

1. While share is the capital into the company, debenture is an debt on company

2. While dividend is paid on shares, interest is paid on debentures

3. While debenture interest and dividend on shares are taxable in hands of receiver.

Which of the statements given above is/are correct?

1 only

2 only

1 ,2 and 3

both 1 and 2

3 only

Explanation:

Share is the capital of the company, but Debenture is the debt of the company. The shares represent ownership of the shareholders in the company. On the other hand, debentures represent indebtedness of the company. The income earned on shares is the dividend, but the income earned on debentures is interest. Interest and dividend both are taxable in the hands of receipent.