Q.______ is a return paid to creditors by the company.

The word/term is Interest — the fixed return that a company pays to its creditors (debentureholders, depositors, lenders) on the money they have lent.

A company raises borrowed capital from creditors such as debentureholders, fixed depositors and banks. Unlike shareholders (who share in profits through dividend), these lenders are entitled to a fixed rate of return on their money whether or not the company earns a profit. This fixed return is termed interest.

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The correct option is interest. Interest is the return the company pays to its creditors (lenders).

Creditors of a company are those who lend money to it, such as debenture holders and depositors. In return for lending, they are entitled to a fixed percentage return called interest. Interest is a charge against profit, which means the company must pay it whether or not it earns a profit.

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