Question -
Answer -
Redemption of debentures by purchase in open market refers to the condition when a company is authorised by its Article of Association to be able to purchase its own debentures. The debentures are purchased to serve the following purpose:
1. As a source of investment which can be sold at a higher price on a later date to earn more profit
2. To cancel debenture liabilities if the debenture rate is higher than the rate of interest in market.