Consider the following difference(s) between equity and debentures:

  1. While issuing of debentures does not dilute the control of the existing shareholders, equity financing dilute the control of existing shareholders
  2. Equity holders are paid before debenture holders at the time of liquidation

Which of the above statements is/are correct?

Answer: [A] 1 Only

Second statement is incorrect because debenture holders are paid before equity holders at the time of liquidation.

This question is a part of GKToday's Integrated IAS General Studies Module