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Question
Identify the form of capital given below. Give a reason for your answer.
Government Bonds
Answer in Brief
Solution
- Because government bonds earn revenue and turn into use, they are debt capital.
- Debt capital consists of titles to wealth, such as shares, debentures, government promissory notes, etc. It represents invested funds and yields income.
- For example, if any individual invests his fund in purchasing govt. bonds, IDBI flexibonds, ICICI bonds, etc., in our country, then he will earn fixed interest income on the value of these bonds. Hence, these bonds are considered as debt capital.
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Chapter 1: Factors of Production - Exercise [Page 30]
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