Question

State whether the following statement is True (T) or False (F):

Perpetual debentures are also known as irredeemable debentures.

Answer 1

This statement is true.

Explanation:

Perpetual debentures do not have a fixed maturity date for the repayment of the principal. The company is under no obligation to repay the principal during its lifetime; the amount becomes payable only upon the company’s liquidation or in the event of a structural default. Hence, they are practically irredeemable.