Which of the following differences between share capital and debentures is correct?
A、Dividend payments on shares is tax-deductible, interest payments on debentures is not tax-deductible
B、Interest payments on debentures is mandatory, dividend payments on shares is discretionary
C、In the event of liquidation, shareholders are paid their investment back before the debentureholders
A、Dividend payments on shares is tax-deductible, interest payments on debentures is not tax-deductible
B、Interest payments on debentures is mandatory, dividend payments on shares is discretionary
C、In the event of liquidation, shareholders are paid their investment back before the debentureholders
【参考答案及解析】
Interest on debentures must be paid and is tax-deductible. Dividends are only paid if the directors declare them and payment is not tax-deductible. In the event of liquidation, debentureholders have their investment repaid before anything is returned to the shareholders.
Interest on debentures must be paid and is tax-deductible. Dividends are only paid if the directors declare them and payment is not tax-deductible. In the event of liquidation, debentureholders have their investment repaid before anything is returned to the shareholders.