Question

TRUE OR FALSE:

Issue of debentures is the most important method of raising long-term funds.

Answer 1

This statement is false.

Explanation:

Shares (equity and preference) are the most important source of long-term finance, as they represent ownership capital and do not require repayment. Debentures are a form of loan capital and provide long-term funds, but they involve fixed interest payments and repayment obligations, making them an important but not the primary source.