When debentures are issued at a discount, under which of the following types is the difference between their nominal value and the issue price explici - Accountancy MCQ CUET Accountancy 2025 13 May Shift 2 2026 | ExamTest.live

mediumMCQCUET Accountancy 2025 13 May Shift 22026Accountancy

1 mark

When debentures are issued at a discount, under which of the following types is the difference between their nominal value and the issue price explicitly treated as the total amount of interest over their tenure?

Solution & Step-by-step Explanation

Zero Coupon Bonds/Debentures do not pay periodic interest during their life. Instead, they are issued at a deep discount relative to their face (nominal) value and are redeemed at par. The initial discount spread constitutes the total implicit return or interest earned by the investor at maturity.

Try it yourself before checking the explanation above.

When debentures are issued at a discount, under which of the following types is the difference between their nominal value and the issue price explicitly treated as the total amount of interest over their tenure?

Convertible Debentures

Perpetual Debentures

Zero Coupon Rate Debentures

Specific Coupon Rate Debentures

Practice with timed mock tests and track your performance across Accountancy.