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JAMB Economics 1991 Question 27

Question 27

Business Organisations

A characteristic of a debenture is that

  1. A.its yield is based on profits
  2. B.its yield is a fixed rate of interest
  3. C.it has no redemption date
  4. D.there is a voting right when interest is paid
Show the answer and explanation

Answer: B (its yield is a fixed rate of interest)

Explanation

A debenture is a loan to the company that earns a fixed rate of interest whether or not profit is made.