Debentures and shares are both used by a company to raise capital funds from the market. But they are very different in their characteristics. A debenture is a debt tool – the funds raised are considered loans to the company. But shares allow you ownership in the company.
Q. Is the word you capitalized in a title?
All words of your title, except for conjunctions and prepositions, should be capitalized. Do not capitalize: a, an, the, in, at, to, etc. Capitalize nouns, verbs, pronouns, possessive pronouns, adverbs, etc. This means you should capitalize “Your” in a title.
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Q. What are the different types of debentures?
The major types of debentures are:
- Registered Debentures: Registered debentures are registered with the company.
- Bearer Debentures:
- Secured Debentures:
- Unsecured Debentures:
- Redeemable Debentures:
- Non-redeemable Debentures:
- Convertible Debentures:
- Non-convertible Debentures:
Q. What are the two types of debenture?
Types of Debentures
- Based on Performance. Based on the performance, there are two types of debentures which are issued i.e. Redeemable Debentures.
- Based on security. Secured Debentures.
- Based on Priority. First Mortgaged Debentures.
- Based on Convertibility. Fully Convertible Debentures.
- Based on Record. Registered Debenture.
Q. What is Debenture example?
A debenture is a bond issued with no collateral. Instead, investors rely upon the general creditworthiness and reputation of the issuing entity to obtain a return of their investment plus interest income. Examples of debentures are Treasury bonds and Treasury bills.
Q. Who is called debenture holder?
A person having the debentures is called debenture holder whereas a person holding the shares is called shareholder. A shareholder subscribes to the shares of a company.
Q. Is investing in debentures safe?
After paying interest for some years, the company regularly defaulted in meeting its obligation towards the debenture-holders. Hence, the moral of the story is that, an investor should not be misled by the fact that when a debenture is secured against the assets of the company means it is a safe and secure investment.
Q. Are debentures less riskier than shares?
Debentures are a corporate or government bond that is not secured by an asset. The structuring of a debenture makes it riskier than a secured debt instrument because collateral does not back it. However, on the risk spectrum, debentures have less risk than preferred shares because of their senior liquidation rights.
