Question

Assertion (A): Interest is paid by the company on Debentures issued as Collateral Security.

Reason (R): Interest is paid by the company on Debentures, including debentures issued as collateral security.

In the context of above two statements, which of the below options is correct?

विकल्प

• Assertion (A) and Reason (R) are correct, but Reason (R) is not the correct explanation of Assertion (A).

• Both Assertion (A) and Reason (R) are correct, and Reason (R) is the correct explanation of Assertion (A).

• Assertion (A) is incorrect but Reason (R) is correct.

• Both Assertion (A) and Reason (R) are incorrect.

Answer 1

Both Assertion (A) and Reason (R) are incorrect.

Explanation:

No interest is payable on debentures issued merely as collateral security, because they serve only as additional security for a loan. Hence, both Assertion and Reason are incorrect.