Question

Assertion (A): Debentures may have fixed or floating charge on the assets of the company.

Reason (R): Fixed charge denies the company from dealing with mortgaged assets, whereas the floating charge does not prevent the company from using the assets.

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

Options

• Both (A) and (R) are correct and (R) is the correct reason of (A).

• Both (A) and (R) are correct but (R) is not the correct reason of (A).

• Only (R) is correct.

• Both (A) and (R) are wrong.

Answer 1

Both (A) and (R) are correct and (R) is the correct reason of (A).