Q.Debenture holders are entitled to a fixed rate of ________.

Debenture holders get a fixed rate of interest, so the answer is (c).

A debenture is an instrument acknowledging a loan raised by a company. Debenture holders are therefore creditors, not owners.

Why (c) Interest:

• Because it is a loan, the company pays a fixed rate of interest on debentures, payable whether or not there is profit. …

Debenture holders are entitled to a fixed rate of interest, so the correct option is (b).

In the sources of business finance chapter of the Tamil Nadu HSC Commerce syllabus, debentures are studied as borrowed (debt) capital of a company.

• A debenture is a written acknowledgement of debt; its holders are creditors of the company, not owners.
• Being lenders, debenture holders receive a fixed rate of interest whether or not the company earns profit. …

The correct answer is (c) Interest. Debenture holders are lenders to the company and receive a fixed rate of interest, not dividend.

In the Tamil Nadu HSC Commerce syllabus, the distinction between shareholders and debenture holders is important:

• A debenture is an acknowledgement of a loan taken by the company. Debenture holders are therefore creditors of the company.
• As creditors, they are entitled to a fixed rate of interest, which must be paid whether or not the company makes a profit. Hence (c) is correct.
• Dividend and bonus are returns paid to shareholders (owners), and only out of profits. …