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Tuesday, April 19, 2011

Redemption of Debentures

Meaning: Repayment of the amount borrowed by a company is called redemption of debentures. The amount required for the redemption can come from the following ways:
- Out of the profits.
- Through a sinking fund set up for the purpose of such redemption.
- Out of the proceeds of new shares/debentures issue.

Redemption may be at par, at a discount, or at a premium. For example:
(1) A denture loan


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