The correct answer is: D. Debentures
Debentures are a type of loan that a company takes out from an investor. The investor lends the company money, and the company agrees to pay back the loan with interest over a set period of time. Debentures are considered to be a debt security, which means that they are a form of borrowing.
When a company is not earning profits, it may have difficulty making
its debt payments. This is because the company does not have the money to pay back its loans. If a company defaults on its debt payments, the investor may be able to take legal action to force the company to pay back the loan. This can be a major financial burden for the company.Equity shares, preference shares, and redeemable preference shares are all types of equity securities. Equity securities represent ownership in a company. When a company is not earning profits, the value of its equity securities may decrease. However, equity shareholders do not have to pay back their investment if the company defaults on its debt payments.
Therefore,
debentures are the most likely security to prove a burden on the finances of a company when the company is not earning profits.