Question

Assertion (A): The control of the company is not diluted when they go for public deposits.

Reason (R): The depositors are given minor voting rights to keep their preference in consideration.

Options

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

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

• Assertion (A) is True but Reason (R) is False.

• Assertion (A) is False but Reason (R) is True.

Answer 1

Assertion (A) is True but Reason (R) is False.

Explanation:

• Assertion (A): True – The control of the company is not diluted when it raises funds through public deposits because depositors are creditors, not owners. They don't get voting rights.
• Reason (R): False – Depositors are not given voting rights at all, so the reason is incorrect.